Alternatives To The Bitcoin Blockchain Attempting To Answer The Scalability Question

The battle for the place of the most scalable cryptocurrency has been going on for a long time – this is an eternal competition in the world of cryptocurrencies.

Bitcoin currently performs 3.8 transactions per second. Visa transmits an average of about 1,700 transactions per second (based on estimates derived from the official statement of over 150 million transactions per day) and is capable of up to 24,000 transactions per second.

PayPal makes about 230 transactions per second. The potential for introducing cryptocurrencies into everyday life is there, but it is currently limited by scalability.

A study published by Tata Communications in 2018 found that 44% of the organizations in the study used blockchain technology in their operations. The study also demonstrates the challenges posed by the introduction of new technologies.

The unsolved problem of scalability at the architectural level negatively affects the popularization of the blockchain and the practical use of this technology in the world. Blockchain-based systems are quite slow.

The sluggish speed of blockchain transactions is a major concern for companies and organizations that depend on high-performance transaction processing systems.

In 2017 and 2018, the world felt the whole salt of scalability problems: serious delays in data transfer (transactions) and high fees on the Bitcoin network. It is for this reason that the number of cryptocurrencies with greater scalability than Bitcoin has begun to increase.

How bad is blockchain (Bitcoin) scaling today?

In order to scale the blockchain, it is not enough to increase the block size or decrease its operating time by reducing the complexity of the hash. With either of these methods, scalability reaches a ceiling before it can reach the transaction level needed to compete with companies like Visa, which averages 150 million transactions per day, or about 1,736 transactions per second (TPS).

In comparison, Bitcoin’s transaction speed is significantly lower than even PayPal’s. The block size is currently set at 1MB (1,048,576 bytes) and the average transaction size is 380.04 bytes (assuming each transaction goes from one wallet to x other wallets – thus a batch transaction would count as one transaction).

The average size of transactions is gradually increasing, so the number that can fit into one of the Bitcoin blocks is decreasing. The current Bitcoin block generation time is 60 minutes, i.e. every sixty minutes a new block is mined. At the moment, a Bitcoin block can only guarantee 3.8 transactions per second.

Why do you need a fast blockchain?

The blockchain is the “ledger” where all transaction information is recorded. It records the transmission of any data. This opens up many new possibilities, especially if the speed and scalability limits are increased.

For example, solving the scalability problem will enable transparent tracking of activities in the IoT. The IoT is made up of thousands of devices that act as one network, constantly exchanging data.

The blockchain can provide complete security of the IoT network, but due to the fact that it slows it down, users refuse to use it. The same goes for high frequency trading.

Securities trading algorithms require extremely high data transfer rates. The network must be able to enter and exit millions of short-term positions with a fraction of a second. Blockchain will make trading transparent, but with current scalability, this is not possible.

A person perceives the response of systems as follows:0.1 seconds – instant response of the system.1 second – fast, but delayed, system response.10 seconds – too long system response. After that, you want to perform other tasks while waiting for the system to complete the action. Most cryptocurrencies have a data transfer speed of 10 seconds.

That is why, in order to popularize digital assets and blockchain in particular, it is necessary to reduce the number of information delays and increase the number of transactions per second.

Top 8 Scalable Bitcoin Alternatives

Cryptocurrency is a major investment in the future and the current situation in the financial market testifies to this. Digital currencies are the result of ongoing efforts to address high transaction costs and cyber-attacks.

The decentralized nature of cryptocurrencies means they are not tied to any financial institution or central bank. Transactions are carried out P2P, without intermediaries, which guarantees low commissions.

However, not all cryptocurrencies are capable of fast transactions. BTC throughput is 7 TPS and transaction time is 60 minutes. Below are the top 8 scalable Bitcoin alternatives.

Ethereum (ETH)

Throughput: 25 TPS.

Transaction time: 6 minutes.

Ethereum (ETH) does not scale well, but it is still better than Bitcoin. At the moment, the Ethereum blockchain carries out about 15 transactions per second, and its throughput is 25 TPS. This is the most popular blockchain, on the basis of which more than 1000 different cryptocurrencies of the ERC 20 standard have been created. Despite not having the best scalability, Ethereum (ETH) is one of the “oldest” blockchains. It is quite versatile, thanks to which it is very popular.

Litecoin (LTC)

Throughput: 56 TPS.

Transaction time: 30 minutes.

The Litecoin (LTC) blockchain processes 56 transactions per second. This is 10 times faster than BTC and 2.5 times faster than ETH. Considering that Litecoin (LTC) was created as a lighter version of BTC, then the main task of this cryptocurrency was completed. This cryptocurrency is very popular with investors. By the way, the Lightning Network can increase TPS several times both in the case of LTC and BTC.

Stellar (XLM)

Throughput: 1000 TPS.

Transaction time: 4 seconds.

Stellar (XLM) is a decentralized payment technology built on the Ripple protocol. Unlike Ripple, Stellar aims to work with emerging markets rather than banking systems and other well-established financial institutions. The decentralized cryptocurrency XLM is very similar to the Ripple token, as it is a modified form of XRP. Designed to connect banks, payment systems, and people, this open-source protocol offers good transaction speed (5 seconds) with extremely low fees. By the way, according to Stephen van Koller, director of corporate and investment banking at Barclays Africa, during testing Stellar was found to be able to carry out 36 million transactions per hour using Google cloud servers, which is about 10,000 TPS.

IOTA (MIOTA)

Throughput: 1500 TPS.

Transaction time: 1-5 minutes or longer.

IOTA (MIOTA) is a cryptocurrency that uses a “tangle” algorithm instead of a regular blockchain, which allows it to “scale infinitely” – the network becomes faster as more users join it. It is designed to securely and efficiently transfer data and payments without fees between IoT devices. This project was founded in 2015 and during its existence has received tremendous support from the crypto community.

Ripple (XRP)

Throughput: 1,500 TPS.

Transaction time: 4 seconds.

The XRP cryptocurrency used in the company’s cross-border payments system consistently performs 1,500 transactions per second, according to Ripple. This is almost 7 times faster than the transaction speed of international digital wallets like PayPal. Moreover, it only takes about four seconds to complete a transaction, and the commission is usually a fraction of a cent. According to the official statement of the company, the number of transactions per second can reach 50,000. Unlike most of the other coins mentioned in this article, Ripple does not have its own blockchain. To carry out transactions, the company has its own technology: the Ripple consensus algorithm. It is because of the lack of its own blockchain that XRP is ignored as a promising coin by part of the cryptocurrency community.

Tron (TRX)

Throughput: 2000 TPS.

Transaction time: 5 minutes.

If mergers and acquisitions in the cryptocurrency world were a sport, TRON would be a gold medalist. Over the past years, the TRON project has become a major player in the world of cryptocurrencies. It owns its own decentralized cryptocurrency exchange (JustSwap), blockchain scaling platform (Sun Network), stablecoins (USDJ, JUST), oracle (JustLink), P2P file sharing network (BitTorrent) and DLive. In June 2018, Tron (TRX) launched its blockchain and migrated from the Ethereum network. The transaction speed reaches 2000 TPS. TRON’s main competitor is Ethereum, both projects are fighting to dominate the DeFi space, and the former is often accused of “copying” the latter. In 2019, Samsung integrated TRON into its Blockchain Keystore, allowing users to access the company’s suite of decentralized apps. TRON CEO Justin Sun called this move the most important milestone in the development of blockchain systems. In the same year, the total number of accounts created on TRON exceeded four million.

EOS (EOS)

Throughput: 4000 TPS.

Transaction time: 1.5 seconds.

Since its launch in 2018, this cryptocurrency has been dubbed the “Ethereum Killer” due to its faster transaction processing speed. Each transaction is processed at a speed of 1.5 seconds, and the network throughput is 4000 transactions per second. The EOS protocol aims to eliminate transaction fees entirely, as well as to increase scalability. The network is also equipped with dApps infrastructure and is currently one of the trending projects in the blockchain market.

Free TON (TON Crystal)

Throughput: 1,000,000 TPS.

Transaction time: less than 1 second.

Free TON is a real revolutionary project in the world of cryptocurrencies, whose throughput reaches 1,000,000 transactions per second. This project provides instant transactions with the TON Crystal cryptocurrency, it uses a secure and reliable Proof-of-Stake consensus, as well as smart contracts written in different programming languages. Thanks to scalability through sharding, the project provides 1,000,000 transactions per second. Sharding is a new way to scale the blockchain. With the growing popularity of cryptocurrency, the number of transactions increases and the speed of their processing decreases. Users either have to wait a long time for a transaction to complete or pay a higher speed fee. Vitaly Buterin, the creator of Ethereum, proposed using a blockchain that breaks into separate fragments – fragments. Shards do not store the entire database, but its fragments. As a result, the speed of transactions increases a thousand times. Users can make payments quickly and not overpay commissions. Exactly this idea of ​​Vitaly Buterin was used to create the TON Crystal cryptocurrency.

Conclusion

The popularity of cryptocurrencies is increasing every year, more and more people are using digital assets to pay in stores and restaurants. Those cryptocurrencies that do not have sufficient scalability will gradually lose their popularity, since their owners will be inconvenient to use them. That is why the number of fast and scalable blockchains is increasing every year. Those blockchains that now have the highest bandwidth will be the “kings” of the cryptocurrency world in the future, and their tokens will be among the most expensive.