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How Time-Effective Are Crypto Payments?

Bitcoin

Transaction speed is a very important concept in everyday life. Imagine having to wait for several minutes or a half hour for your transaction to be processed in a store. Now think about how many transactions you make per day on average and how much time you would lose waiting for them to be processed on a daily or weekly basis. It would definitely make you rethink your whole payment method.

Nevertheless, the transaction speed of credit cards is at a very high level and most of our transactions happen almost instantly, which is why we rarely think about speed as a factor. In reality, transaction speed is quite a stumbling stone when it comes to the use of cryptocurrencies going worldwide. However, significant progress has been made in this field and some cryptocurrencies did better than others.

Bitcoin

Unlike the current Bitcoin price, which is over $66,000 at the time of writing, the speed of Bitcoin transactions is far from impressive at the moment. Considering that 7 TPS are unlikely to satisfy any serious market, Bitcoin is currently quite behind many other cryptocurrencies. Despite the fact that Bitcoin is quite widely used, some industries such as trading, investing and online gambling need to use other faster payment methods as they need to provide instant payouts to their customers.

Although, there are some game changing efforts to boost transaction speed. Developers are implementing layer 2 blockchains that are supposed to improve this significantly. Basically, the result would be opening a channel between two parties that would complete a transaction immediately. It is only when these channels are closed that the transactions would be handled on layer 1 blockchain. 

Another drawback of Bitcoin is its very high energy consumption. It has been found that mining Bitcoin consumes over 110 Terawatt Hours each year, accounting for around 0.55% of global electricity production. 

Ethereum

On the other hand, the first runner up after Bitcoin when it comes to awareness, Ethereum has made significant progress after switching to Ethereum 2.0. Apparently, they shifted from proof-of-work (PoW) to the proof-of-stake (PoS) model which caused an increase in scalability and, therefore, a decrease in transaction time. Currently, Ethereum supports up to 100,000 TPS and the transaction validation time is around 13 seconds. These are excellent results for the world of crypto transactions and Ethereum is the leading cryptocurrency in the battle to become a widely used payment system. As well as fast transactions, Ethereum holders are also benefitting from the coin’s current high price of over $3800; it’s on its way towards its all-time high of a little over $4700.

Ripple

Ripple has been known for its high transaction speed going up to 1500 TPS and validation time up to 5 seconds. Despite the fact that Ethereum beats Ripple by a lot, Ripple still remains one of the best options for crypto payments since its validation time is quite optimized and stable.

Solana

Ever since its appearance in 2020, Solana has made a grand entrance with its scalability solution that enables up to 24000 TPS. Solana’s high performance and speed makes it independent of the traditional layer 2 blockchain when it comes to the transaction speed boost. It is a whole step ahead compared to other currencies as its layer 2 focuses on connecting with other chains. Hence, Solana is a serious candidate for most optimized cryptocurrency for payments.

Cosmos

Cosmos has been at the top with its impressive upper limit of 10000 TPS thanks to its Tendermint consensus algorithm. However, the actual speed of transactions can vary. What is interesting about Cosmos is that their team created a Cosmos software development kit (SDK) which enables developers to blockchains using the previously mentioned algorithm.

Cardano

With its transaction speed of more than 1000 TPS, Cardano is more than concurrent with other crypto currencies in the race for the most efficient cryptos for payment. The algorithm upon which Cardano is built works on the principle of Proof-of-Stake (PoS) approach resulting in higher transaction speed and higher transaction throughput. Another perk of using Cardano is that the transaction fees are lower than for other currencies.

NEO

Launched in 2014 under the name of Antshares, later to be rebranded as NEO, this crypto currency used to be popular for its transaction speed. However, in time, EOS and Ripple beat it in the speed domain. Despite its lower transaction speed, there are other advantages connected with NEO. For instance, its consensus algorithm is very secure meaning it is safer from malware attacks.

Stellar

Stellar was built for quick cross-border transactions at a lower cost. It was developed by a co-founder of Ripple, who wanted to create a faster alternative to existing payments. It supports up to 1000 TPS with a confirmation time of just a few seconds. The underlying algorithm also boasts high speed and security. Stellar has made its way to famous companies such as IBM.

EOS

EOS is currently one of the most scalable blockchain platforms. It can handle up to 4000 TPS thanks to its DPoS consensus algorithm. The way it works is that the EOS community actually validates transactions and adds them to the blockchain. One can rely on the community to be responsible as they receive rewards for the work they do.

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Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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