Blog manager: Giovanni Capaccioli

Translated by: Lawlinguists

The speed of blockchain transactions: the evolution of a limit

The speed of blockchain transactions: the evolution of a limit

edited by: 
Dane Marciano, CEO of Affidaty S.p.A
Giovanni Capaccioli, R&D of Affidaty S.p.A

Efficiency

Ten years have passed since the first blockchain, the one that started the movement was born. Programmers (Satoshi Nakamoto itself or a group of programmers referring to him) have, during the time, maintained the code clean, without making almost no amendments.

It is because it was thought that it was capable of managing the best and most various scenarios from then on.

Later, several blockchains were born. Some took inspiration from Bitcoin, with little deviation, others started to figure out new points of view, problems and socio-economic realities that emerged after the birth of Bitcoin.

It has to be highlighted how the Bitcoin ecosystem transformed itself. In the beginning, it involved a few passionate users, while now includes ten million users and more than thirty million wallets. Even the number of transactions experienced such growth, attaining approximatively hundreds of thousands.

If on one side the technology is growing, on the other it presents a problem: the difficulty to process massive amounts of transactions at a proper speed such that a citizen could use it to carry on the multitude of daily microtransactions. 

The biggest goal for Bitcoin developers is to bring their blockchain to everyone, including those who perform several daily microtransactions. To achieve it needs to be capable to cover the same amount of transactions as a credit card issuer like Visa, which is able to deliver 150 million daily operations, 24 thousand per second. However, those are different systems, one being strongly decentralized and distributed, the other highly centralized.

But why bitcoin to date could not process as many operations? There could be different reasons, depending on the topic discussed, but the main two are the proof of work (PoW) as a whole and “the dimension limit of the block”.

Objectively, Bitcoin PoW was intended to allow for a block to be found, mined, hashed, closed and accepted by all nodes in the network in around ten minutes. Extremely secure, trustless, distributed and decentralized. Its algorithm, moreover, automatically adjust to keep the total time around ten minutes. That’s why it estimated to have around seven transactions per second. 

Besides, there is a restriction on the block size that limits the application and excludes microtransactions. 

In 2010 Nakamoto introduced a security limit on block dimension of 1 MB. in this way, the blocks weighing more than that would have been automatically discarded because invalid. The decision was made to limit the possibility of DDoS attacks that could create large, or infinite, blocks able to paralyze the whole network. However, this implied some long-run problems related to the capacity of the system itself.

The current limit of one MB can realistically support from three to seven operations per second. This performance is already insufficient, and it is estimated to be worsened by the expansion of the user base.

That’s why every blockchain developer is continuously seeking new solutions to assist, alternate, or replace current methods. 

The bigger the community, the better the solutions will be, and the products will better fill the needs of the different ecosystems.