What is the maximum throughput supported by the transaction of the Bitcoin?

[lhrbeijing]

Including traditional on-chain transactions, Segregated Witness transactions, and the second layer of the Lightning Network.
Or maybe there are new ways of allowing transactions that I don't know yet.

The unit is how many transactions per second.
Has anyone made an estimate?

[1715306311]

1715306311

[1715306311]

1715306311

[1715306311]

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[seoincorporation]

The unit is how many transactions per second.

We you figure out the amount you will be surprised because the number is really small if you compare it with visa transactions.

You can go to the block explorer and see the amount of transactions in the last 10 blocks.

The one with the biggest amount of transactions is 2,945 tx on it, and tx are each 10 minutes. so, taking about seconds i would say:

2954/60=4.92 transactions/second.

There is an estimate, but remember each transaction has it's own size in Bytes, and each block has a limit, which means some one could make a 1MB transaction to fill one block. That would take tons of inputs and outputs, but it's possible,

[nc50lc]

The one with the biggest amount of transactions is 2,945 tx on it, and tx are each 10 minutes. so, taking about seconds i would say:

2954/60=4.92 transactions/second.

2954/60=49.23.... typo?
2945/10/60 is closer to your total.

If we're comparing it with Visa, then Bitcoin is still faster since sending a transaction to mempools only take a second.
Yes, it's at risk of double-spend while unconfirmed but that's also the case with banks transfers which have a way longer reversal/chargeback window.

@lhrbeijing For the lightning network, it can't be answered since transactions are done in between channels and their routes.
But considering that the speed of each lightning transaction only take seconds, it would be far higher than onchain confirmed transactions.

[stompix]

The one with the biggest amount of transactions is 2,945 tx on it, and tx are each 10 minutes. so, taking about seconds i would say:

2954/60=4.92 transactions/second.

2954/60=49.23.... typo?
2945/10/60 is closer to your total.

He missed a 0 in 600, he did the math right, for that moment the average was around that number, funny enough that block came roughly 10 minutes after the previous, but for the last 24 the average is far lower, at 3.1, highest for a 24h average seems to be 5.70 reached back in 2017.

But I think he asks about the maximum possible, at which point LN renders the main chain irrelevant in capacity, so that limit might actually be triggered by the number of coins and funds available and the number of channels, the network could theoretically do 1 million TPS a second but there might never be enough participants do reach that.

[witcher_sense]

Including traditional on-chain transactions, Segregated Witness transactions, and the second layer of the Lightning Network.
Or maybe there are new ways of allowing transactions that I don't know yet.

The unit is how many transactions per second.
Has anyone made an estimate?

I don't think there is a scientifically reliable way to measure overall transaction throughput, especially if we want to include transactions on the Lightning Network in this total number. If you think about it, every transaction in a bitcoin block may represent millions and millions of transactions on layer two, so each bitcoin block may contain the economic activity of a big city or even a whole country. People who criticize bitcoin for being "too slow" don't seem to understand that decentralized settlement of transactions is more important than the number of transactions per second, this is why in the traditional financial system we have one FedWire and many-many PayPals. What is interesting is that FedWire is very slow, but it somehow can afford the settlement of billions of transactions made by payment networks. And who do you think is more important and has more power? Not who touches money first, but who decides last whom this money belongs to.

[ABCbits]

If you include Lightning Network, theoretically it's near unlimited which limited by computational power of device used to run LN node/channel. But for on-chain transaction, here's the rough calculation.

Code:

Block weight: 4000000
Transaction with smallest weight on Bitcoin blockchain[1]: 396
Total transaction on block: 10101.010 ....
Transaction per second: 10101.01 / 600 = 16.835 ... TPS

[1] https://blockchair.com/bitcoin/transactions?s=weight(asc)&q=time(2022-10-27%2011:15:38..2022-10-28%2011:15:38)#f=hash,block_id,fee_usd,output_total,time,weight,size

[PrimeNumber7]

We you figure out the amount you will be surprised because the number is really small if you compare it with visa transactions.

I don't think it is realistic to compare bitcoin throughput with the throughput of a major credit card network.

Visa's transactions are stored in a centralized database. By contrast, all bitcoin (on-chain) transactions are broadcast and stored by every bitcoin user with a full node. Granted, LN will aggregate transactions together, but the decentralized nature of LN will not allow scaling to reach "visa" levels.

[NotATether]

We you figure out the amount you will be surprised because the number is really small if you compare it with visa transactions.

I don't think it is realistic to compare bitcoin throughput with the throughput of a major credit card network.

Visa's transactions are stored in a centralized database. By contrast, all bitcoin (on-chain) transactions are broadcast and stored by every bitcoin user with a full node. Granted, LN will aggregate transactions together, but the decentralized nature of LN will not allow scaling to reach "visa" levels.

It's a classic Sztorc "Trilemma" of scalability vs decentralization vs security, and the solution is to make a centralized* Layer 2 that is scalable and secure. Everything else is just a band-aid.

*Note: The owners of this network will be the collective group of merchants who want to settle payments with customers. They would each have a partial ownership proportional to their percentage transaction volume on the layer, just like shares in a company. As thousands of merchants will want to use this kind of network eventually, that means that individual ownership of the total is so small that it can be considered to be decentralized.

[BlackHatCoiner]

[...]

Think of base layer as the slow and expensive path to have a transaction settled, just like moving a precious metal from one place to another. Now, think of locking that metal to a magical box, and get paper notes, that are 1:1 pegged to it, and which you can transfer more easily, cheaply, and can be withdrawn any time for the metal. That could be a Bitcoin Layer 1, and Layer 2 analogy.

On-chain transactions don't equate with all transactions that happen within the system.

Granted, LN will aggregate transactions together, but the decentralized nature of LN will not allow scaling to reach "visa" levels.

Provided that both have potentially unlimited transactions per second, there's no point to continue arguing which one can serve better in speed.

[lhrbeijing]

I don't quite understand the status quo.
May I ask, can the Lightning Network running on Bitcoin guarantee absolute security?

[BlackHatCoiner]

May I ask, can the Lightning Network running on Bitcoin guarantee absolute security?

Begin studying:

• Lopp - Lightning Network resources
• Basics of the Lightning Network
• The Lightning Network FAQ
• What security weaknesses result from using off chain solutions?

There's no such thing as "absolute security". Security is a goal to work towards, just as privacy.

[NotATether]

I don't quite understand the status quo.
May I ask, can the Lightning Network running on Bitcoin guarantee absolute security?

Absolute security from what?

If you're talking about funds security, that is not possible since LN works on a multisig and timelocks model, where you lose access to the funds if you go offline for a period of time, unlike in Layer 1.

[lhrbeijing]

Begin studying:

There's no such thing as "absolute security". Security is a goal to work towards, just as privacy.

Well, yes. Thank you.
I seem to have tacitly assumed that on-chain transactions are absolutely safe, although theoretically it takes 6 blocks to confirm.
I don't feel transactions via Lightning have the same security risks as traditional on-chain, so there's no direct comparison.

If you're talking about funds security, that is not possible since LN works on a multisig and timelocks model, where you lose access to the funds if you go offline for a period of time, unlike in Layer 1.

“One of the greatest problems with the Lightning Network, however, is offline transaction scams.
If one participant in a payment channel chooses to close it while the other party is offline, the former can steal the funds.”
Oh so, indeed.

After the Lightning Network is established, the number of transactions before uploading to the chain for confirmation cannot be estimated.
And staring at the maximum transaction throughput that Bitcoin can support doesn't seem to make much sense.
I heard that Bitcoin is positioned as digital gold......

PS: Forgive my English need to rely on Google translation, I was not very accurate when I checked the words.

[BlackHatCoiner]

I seem to have tacitly assumed that on-chain transactions are absolutely safe, although theoretically it takes 6 blocks to confirm.

There's no standard number that insures absolute safety, such as 6, either. Every transaction is reversible, theoretically. If it was just confirmed, 1 block now, it requires less effort than one that's 100,000 blocks deep, but they're both reversible, with enough effort. The "6 blocks" is just a good tradeoff between time and security. Given that you own 40% of hashrate, you have 50.398% chances to reorg 6 blocks.

To go even deeper, cryptography isn't "absolutely secure" either. Theoretically you can find all private keys with a balance. Practically, it's impossible.

I don't feel transactions via Lightning have the same security risks as traditional on-chain, so there's no direct comparison.

From my experience, the significant risk with Lightning is human error. There are some good odds to mess things up with the software, especially if you're not a techie, or if you haven't fully understood how Lightning works.

[seoincorporation]

The one with the biggest amount of transactions is 2,945 tx on it, and tx are each 10 minutes. so, taking about seconds i would say:

2954/60=4.92 transactions/second.

2954/60=49.23.... typo?
2945/10/60 is closer to your total.

If we're comparing it with Visa, then Bitcoin is still faster since sending a transaction to mempools only take a second.
Yes, it's at risk of double-spend while unconfirmed but that's also the case with banks transfers which have a way longer reversal/chargeback window

You are right there was a typo, since we have block each 10 minutes that should be involved in the equation as you did.

The comparative with visa is tricky, because bitcoin has a transaction limit/time and vice can process a huge amount of transactions, even if the aren't instant as the bitcoin mempool visa can process millions of transactions each day.

On this article we see how huge is the volume:

VisaNet, the card network’s payment processing system, handles an average of 150 million transactions per day and the firm claims it is capable of processing more than 24,000 Visa transactions per second.

Source: https://blog.unibulmerchantservices.com/processing-24000-visa-transactions-per-second-how-its-done/

[LoyceV]

The one with the biggest amount of transactions is 2,945 tx on it, and tx are each 10 minutes. ~ 4.92 transactions/second.

Most exchanges are now batching transactions, and the average transaction has more than one input and output. Should those be counted as separate transactions, or do we count 100 addresses that receive Bitcoin in one txid as one transaction?

But I think he asks about the maximum possible, at which point LN renders the main chain irrelevant in capacity, so that limit might actually be triggered by the number of coins and funds available and the number of channels, the network could theoretically do 1 million TPS a second but there might never be enough participants do reach that.

I'd say there is no upper limit for LN. Transactions don't have to be public, so if the total network is doing 1 million transactions per second, anyone can send more transactions on their own channel.

[pooya87]

Most exchanges are now batching transactions, and the average transaction has more than one input and output. Should those be counted as separate transactions, or do we count 100 addresses that receive Bitcoin in one txid as one transaction?

Since it is easier to count transactions in a block rather than counting outputs while ignoring change output, every time the rate is reported it is counting transactions. But you are right, technically when talking about "throughput" we should count payments not transactions and one tx can contain multiple payments.

[PrimeNumber7]

We you figure out the amount you will be surprised because the number is really small if you compare it with visa transactions.

I don't think it is realistic to compare bitcoin throughput with the throughput of a major credit card network.

Visa's transactions are stored in a centralized database. By contrast, all bitcoin (on-chain) transactions are broadcast and stored by every bitcoin user with a full node. Granted, LN will aggregate transactions together, but the decentralized nature of LN will not allow scaling to reach "visa" levels.

It's a classic Sztorc "Trilemma" of scalability vs decentralization vs security, and the solution is to make a centralized* Layer 2 that is scalable and secure. Everything else is just a band-aid.

*Note: The owners of this network will be the collective group of merchants who want to settle payments with customers. They would each have a partial ownership proportional to their percentage transaction volume on the layer, just like shares in a company. As thousands of merchants will want to use this kind of network eventually, that means that individual ownership of the total is so small that it can be considered to be decentralized.

In theory, depending on how the LN topology evolves over time, it could eventually have similar throughput as Visa. In order for this to be possible, there would need to be a fairly small number of "banks" that many users open channels with, and each 'bank' is connected to each other (or is also possibly connected to a 'central bank'). This is somewhat similar to how the banking system works today but without fractional reserves (the 'banks' and 'central bank(s)' would need to have a lot of capital, or else they would be unattractive for users to connect to their nodes.

Granted, LN will aggregate transactions together, but the decentralized nature of LN will not allow scaling to reach "visa" levels.

Provided that both have potentially unlimited transactions per second, there's no point to continue arguing which one can serve better in speed.

I don't think the LN topology will ever look like what I described above.

It is clear that LN is much faster than Visa transactions in terms of the merchant receiving their money. I understand that merchants' agreements with payment processors vary, but I speculate that in a best-case scenario, merchants receive money in a number of days, although there is the risk of chargebacks months after the date of the transaction. The question of which setup is superior is not a technical one. Each setup has its own pros and cons, and the costs associated with fraud are borne by different parties in each setup.

[LoyceV]

every time the rate is reported it is counting transactions. But you are right, technically when talking about "throughput" we should count payments not transactions and one tx can contain multiple payments.

I don't feel like checking the data (it's a lot of work), but my gut feeling tells me the number of transactions per block is going down, despite Segwit, because of the batching which leads to much larger transactions. Counting transactions as a measure of Bitcoin's scaling would give the wrong idea.

[NotATether]

every time the rate is reported it is counting transactions. But you are right, technically when talking about "throughput" we should count payments not transactions and one tx can contain multiple payments.

I don't feel like checking the data (it's a lot of work), but my gut feeling tells me the number of transactions per block is going down, despite Segwit, because of the batching which leads to much larger transactions. Counting transactions as a measure of Bitcoin's scaling would give the wrong idea.

Especially since there are a variable number of transactions in each block, so for any given time period, you would have to analyze the last 2016 (for example) blocks and take their average transaction count to compute the TPS more accurately.