No, Visa Doesnt Handle 24,000 TPS and Neither Does Your Pet Blockchain


When it comes to measuring the speed of new blockchains, the comparison is always with Visa. Despite not being a blockchain, the 24,000 transactions per second Visa reportedly handles have attained mythical status. That figure is unquestioningly trotted out whenever scaling is discussed. In reality, claims of Visas throughput, as well as those of emerging blockchains, have been greatly exaggerated.


Visa, Scaling, and the 24k Hoax

No, Visa Doesnt Handle 24,000 TPS and Neither Does Your Pet BlockchainBitcoin was envisaged as a payments system and so it was natural, long before the store of value notion emerged, that comparisons would be made with existing global payment systems. Bitcoins early adopters knew that if the technology took off, some time in the future it would need to handle magnitudes more transactions per second than the 7 it could muster. Someone mentioned Visa with their magical 24k per second, and its stuck ever since.

Only that figure isnt entirely accurate. In fact its not even remotely accurate. In reality, Visa processes around 1,700 transactions per second, a figure it rarely exceeds. The larger number is the one that Visa claims, and its the one thats usually referenced in comparison to bitcoin and every other blockchain. In theory Visa should be able to handle that volume in fact its been reported that its servers can handle as much as 56k tps but thats all theoretical, much like the claimed throughput of new blockchains that can operate at the speed of light in the lab, but significantly worse in the wild. Theres a big difference between operating a testnet on a bunch of Amazon servers and a mainnet distributed around the globe.


You Cant Have Your Cake and Eat It

Speed and throughput come at the expense of decentralization, and the more you increase the former, the more of the latter you lose. Blockchains such as EOS and NEO are certainly faster than bitcoin, but theyre also highly centralized because they rely on a much lower number of validator nodes, among other things. There is nothing inherently wrong with having a fast but semi-centralized blockchain, but it is never going to become a global payment system with censorship-resistant properties that can rival bitcoin.

Even at 1,700 transactions per second, Visa is still significantly faster than bitcoin and most other blockchains, but this figure is at least a far more realistic one to reference and a more achievable one to aim for. Blockchain scaling can be implemented in a range of ways, from increasing the block size to layer two solutions (Lightning Network) to using techniques such as sharding, all of which carry various trade-offs. There is no reason why Bitcoin Core, Bitcoin Cash, and other blockchains cannot reach much higher speeds and levels of throughput without compromising on their decentralization, but this will take time and tech.

For now, any time a new blockchain starts making promises about beating Visas 24,000 tps, be sceptical and examine the fineprint. IOTAs meant to be fast and scalable, but like a kid whos terrified of removing the stabilizers from their bike, it still doesnt function without its coordinator. Hashgraph is also meant to be fast, but it comes with threats to sue anyone who tries to fork it and any blockchain that can be sued isnt a decentralized network. Come to think of it, its more like Visa.

20.04.2018 / 16:05 30
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