Measuring Blockchain Speed: What Is TPS?

AI summary

The article explains the importance of transactions per second (TPS) as a key measure of blockchain speed and scalability, highlighting how higher TPS allows networks to serve more users and avoid congestion. It compares the TPS of popular blockchains, notes the trade-offs between speed, security, and decentralization, and discusses ongoing efforts—such as Ethereum 2.0’s development—to improve scalability for mass adoption. Ultimately, achieving high TPS without compromising other essential network qualities is presented as a critical challenge for blockchain developers.

Transactions are the basic unit of activity on any blockchain. Every transfer of value, smart contract execution, or interaction with a decentralized application becomes a recorded transaction. How quickly a network can process these transactions directly affects its usability, scalability, and user experience. One of the main ways blockchain performance is measured is transactions per second (TPS). TPS indicates how many transactions a blockchain network can verify and add to the ledger every second. The higher the TPS, the more users the network can support simultaneously, and the better it can handle periods of high demand.

What Does TPS Mean in Blockchain?

TPS, also known as network bandwidth, is the transaction-processing capacity of a blockchain. It is a key metric for understanding how quickly and how scalable a network is under both normal and peak conditions.

Most blockchains have:

• Average TPS, which reflects typical network performance
• Maximum TPS, which shows how much load the network can theoretically handle during traffic spikes

Sudden market events, such as sharp price movements, often cause a surge in transactions. If a blockchain cannot keep up with increased demand, the network becomes congested, leading to slower confirmations and higher transaction fees.

TPS vs Block Time: What’s the Difference?

TPS alone does not fully describe blockchain speed. Another essential metric is block time, which is the average time it takes to create and confirm a new block.

• TPS shows how many transactions a network can process per second.
• Block time tells you how quickly transactions are confirmed

A blockchain may have a high TPS but long block times, or shorter block times with lower TPS. Real-world performance depends on the balance between the two.

How to Calculate Blockchain TPS

To estimate a blockchain’s transactions per second, you need three variables:

• Average block time
• Block size
• Average transaction size

The approximate formula is:

TPS = (Block size ÷ Average transaction size) ÷ Block time

Example TPS Calculation

If:

• Block size = 2 MB
• Average transaction size = 1 kB
• Block time = 40 seconds

Then: TPS = (2 MB ÷ 1 kB) ÷ 40 = ~50 TPS

The figure is an approximation, as real-world factors such as network overhead and transaction complexity can affect the actual results.

TPS Comparison Across Blockchains

Transaction throughput varies significantly between networks due to differences in consensus mechanisms and architecture.

• Bitcoin processes around 7 TPS
• Ethereum averages 15 TPS
• Newer blockchains achieve much higher throughput

Fastest Blockchains by Average TPS

Why TPS Matters for Network Fees

When blockchain demand exceeds network capacity, users compete for faster processing by paying higher fees to validators or miners.

Low TPS networks:

• becomes congested during peak usage
• Experience slower confirmations
• See transaction fees rise sharply

High TPS networks:

• Handle more users simultaneously
• Reduce congestion
• Keep transaction fees more predictable and affordable

This is one reason blockchains are often cheaper than traditional payment systems, but only when the network can scale effectively.

TPS, Scalability, and the Blockchain Trilemma

The blockchain trilemma refers to the difficulty of achieving high levels of:

• Scalability
• Security
• Decentralization

Improving TPS often requires trade-offs. Some projects prioritize speed by limiting decentralization or making architectural compromises. Others aim for a more balanced approach, even if it means lower throughput.

Different blockchains solve this problem in different ways:

• Solana uses a hybrid Proof of History and Proof of Stake model
• Fantom relies on DAG technology to process transactions in parallel
• Polygon uses Layer 2 solutions and sidechains to scale Ethereum

Ethereum 2.0 and Future TPS Improvements

Ethereum’s transition from Proof of Work to Proof of Stake began in 2020 with the launch of the Beacon Chain. The Merge, completed in September 2022, entirely shifted Ethereum to PoS.

Sharding represents the final scalability upgrade, splits the network into 64 segments, and leads to:

• Increase TPS significantly
• Reduce congestion
• Improve overall network efficiency

Once fully implemented, Ethereum could support up to 100,000 TPS under ideal conditions.

Conclusion

As cryptocurrencies continue to gain mainstream adoption, blockchain networks must process an ever-growing number of transactions. TPS is a critical metric for evaluating whether a blockchain can meet this demand. High transaction throughput drives mass adoption, but it must not come at the expense of security or decentralization. Finding that balance remains one of the biggest challenges in blockchain development today.

FAQ: Transactions Per Second (TPS) in Blockchain

What is TPS in blockchain?

TPS stands for transactions per second. It measures how many transactions a blockchain network can process every second.

Is higher TPS always better?

Not necessarily. While high TPS improves scalability, it can come at the cost of decentralization or security. A balanced design is often more sustainable.

Why does Bitcoin have such low TPS?

Bitcoin prioritizes security and decentralization over speed. Its design limits block size and block frequency, resulting in lower TPS.

How does TPS affect transaction fees?

When TPS is low and demand is high, users compete by paying higher fees. Higher TPS networks reduce congestion and lower costs.

Can TPS be increased without changing the blockchain?

Yes. Layer 2 solutions like rollups and sidechains can significantly increase effective TPS without altering the base layer.

What blockchain has the highest TPS?

Solana currently reports some of the highest TPS figures among major blockchains, though real-world performance varies depending on network conditions.

What is the difference between TPS and block time?

TPS measures how many transactions a network can process per second. Block time measures how long it takes to produce a new block. A blockchain can have fast block times but still low TPS if blocks contain few transactions.

How do Layer 2 solutions affect TPS?

Layer 2 solutions process transactions off the main blockchain and then settle them on-chain, significantly increasing overall throughput without changing the base layer’s TPS and improving scalability while preserving security.