With cryptocurrencies being more and more traded and also used for payment, the transactions per seconds capability becomes more and more important.
Cryptocurrencies are about to become mainstream. They are already getting frequently featured on mainstream media and more and more people are coming into the cryptosphere. In 2018, more than 100,000 shops in Japan alone will accept Bitcoin. Even ebay is considering to accept cryptocurrencies as a payment method. So even with the big players now in the game, in a couple of years or even months, we will see most shops accepting cryptocurrencies.
BUYING & TRADING CRYPTO
If you want to but some "underdog" altcoins like neo, lisk, stratis, cardano, you first have to buy the "established" ones like bitcoin, bitcoin cash, ethereum and litecoin via coinbase or a similar platform via credit card or debit card or bank transfer. Only after that you can "trade" them for other altcoins on exchanges like bittrex, kraken, bitfinex etc. And for that, you first have to transfer your bought cryptocurrency to the exchange.
So, unlike paypal, or visa credit card network, cryptocurrencies are not only used as a payment method, but also for trading. And with more and more new traders coming into the cryptosphere and also oldschool traders like stock & derivates traders changing to cryptotrading, cryptocurrencies need a higher transactions per second time than paypal or visa combined.
BANK THE UNBANKED
The main purpose of a lot of cryptocurrencies is to "bank the unbanked".
There are more than 2 billion people worldwide with no bank accounts, but most of them do have access to internet or or have a smartphone with internet access. A lot of cryptocurrencies want to help those have a "crypto bank account", so that they can receive and send money (cryptocurrency).
GAMES
Games built on blockchain, like the recently developed and very popular game cryptokiddies, that is built on the Ethereum blockchain, also require transactions as gaming actions.
Smart Contracts
More and more applications get built on blockchain, like on the ethereum blockchain and these need also transactions to work.
Saving Data
Every day, new usecases for blockchain technology are discovered. And one of those is the embedding or saving of data in the blockchain, either for journalistic purposes or for pure data storage. This process also requires transactions in order to be performed.
CRYPTOCURRENCIES TAKING OVER THE WORLD
So, again, unlike the paypal or visa network, which requires everyone to have a legit bank account and thus excludes 2 billion people worldwide with no bank accounts, cryptocurrencies face a megatask in terms of processing transactions, as they have to process transactions for
- trading cryptocurrencies in first place
- usage as cash
- usage in games
- usage in smart contracts / applications
- usage in journalism and data storage
-etc. pp. -> There will probably be at least a dozen more use cases soon, the more we understand and discover the possibilities that the blockchain technology gives us, the more use cases will emerge.
So, what transaction numbers are we talking about?
Let's have a look at the
Tx/s = transactions per second.
Bitcoin ~ 7 Tx/s theoretically (practically 3-4)
DASH ~ 10 Tx/s
Ethereum – 7-15 Tx/s (depending on the contract)
Bitcoin Cash does 24 Tx/s and is capable of 96 TPS without a hard fork
Waves Platform ~100tx/s
Digibyte ~ 140 Tx/s (scaling continously to higher tx/s every year)
PayPal ~ 193 Tx/s on average
Visa ~ 1,667 Tx/s
Ripple ~ 1000-24000 Tx/s, real number is currency unknown
What Transaction numbers do we need?
Usage as cash:
If we want to use a cryptocurrency as a payment method, we need AT LEAST the tx/s numbers of (VISA + Paypal combined) x 2 as we also additionally want to bank the unbanked (~2.5 BILLION people). And considering that most of the currently banked people (~4.5 BILLION) people don't have paypal nor visa / mastercard, we need an even faster transaction speed if we want these people to use cryptocurrency as a payment, too. So we need at least (paypal+visa)*4 -> (calculating with round numbers) (200tx/s + 1700 tx/s) *4 = 7600 tx/s.
Usage for applications, data storage etc.
Let's assume that these applications also require at least as much tx/s as the usage as cash, we can assume that we also need around ~8000 tx/s
Conclusion:
If we want to use a cryptocurrency for both as a payment and application system, it has to be able to process at least 16000 tx/s. Our world is getting more digital every day. And the rate in underdeveloped countries like in, Ghana, Nigeria, Venezuela etc. where the local fiat currency is inflating to ridiculous highs, people are more and more discovering cryptocurrencies as a storage of value and and also as a payment system, thus we need even more tx/s. Considering that it is highly likely that we will have not one, but several cryptocurrency used parallely, we can do a rough estimate that we would be on the safe side with 20.000 transactions per second for a widely used cryptocoin our near future.