Blockchain Myths: Speed
For many businesses, agility and the ability to respond quickly to the market are essential to running a successful business. Integrating what may appear to be a complex technology on the surface such as blockchain, may seem like a step in the wrong direction. However, the idea that blockchain is slow is yet another myth born out of a public blockchain (Bitcoin and Ethereum, for example) that has already been addressed by enterprise-grade blockchain providers. A private, permissioned blockchain created specifically for your needs does not have to be a snail-paced technology.
Why Is Blockchain Slow?
Let us first address the origin of the myth. The Bitcoin scalability problem is one of the best-known issues the network faces. Bitcoin’s throughput comes up to seven transactions per second. The reason for this is that Bitcoin is decentralized (as are most other public blockchains). To keep the network safe and healthy, its creator trades-off decentralization against throughput.
But, Bitcoin is only one blockchain. Arguably, it is now being treated as a digital commodity rather than the e-money it was originally intended for. Ethereum, in comparison, is the most widely used network for its programmability, from decentralized applications (D’Apps) to decentralized finance (DeFi). It is much faster than Bitcoin. While Bitcoin's block time is around 10 minutes, Ethereum's is seconds (13.55 seconds as of the time of writing). Additionally, Ethereum is moving from a Proof of Work consensus algorithm to Proof of Stake (find out more here), which is set to boost its transaction speed, along with many other improvements.
Public & Permissionless vs Private & Permissioned
It's important to note, that both Bitcoin and Ethereum are public and permissionless blockchains. In other words, anyone can participate in the network. This is one of the reasons why they’re relatively slow and inefficient when compared to other technologies. To keep in line with their decentralized nature—some tradeoffs had to be made.
When it comes to blockchains that are used by businesses, the private and permissioned blockchain platforms can be made significantly faster than their public counterparts. This is simply because there is a smaller number of participants on the network. Hence, unlike public blockchains, there is no need to accommodate thousands or even millions of users while ensuring that everyone is treated fairly and equally.
Resources permitting, all major private and permissioned blockchains are capable of handling thousands of transactions per second. But public blockchains are not too far away from this either: several scaling solutions are attempting to solve this issue. In the debate of public vs private, when it comes to enterprise-grade use, it comes down to the amount of control you require for the network via permissioning and privacy. Using public blockchains means you have to play by the same rules as everyone else, including being held up during periods of high network activity. Since access to a private and permissioned network is much more limited (even if you share it with other businesses or several branches of your own company), you can expect better performance consistently and know that you are in control of the network.
Enterprise Blockchain Speed
It is very difficult to pinpoint the exact speed of each enterprise-grade blockchain provider’s product. There’s a significant difference between what the network can potentially handle and what is realistically possible— a lot will depend on your requirements.
For example, a significant factor in the speed of your blockchain network is the number of nodes providing consensus on the network. As a rule of thumb, the more nodes you have, the lower your throughput. But, this is only one aspect, speed will ultimately depend on things such as:
- Where the nodes are physically located
- The node hardware
- Whether you are using only blockchain or a hybrid solution of which blockchain is only one part
- The block size and frequency
- The size of transactions
- The complexity of the integrated smart contracts
Like all pervasive myths, blockchain myths also have some basis in reality. While the technology is, on average slower than other databases, enterprise-grade solutions are definitely not as slow as public and permissionless networks and can be made faster depending on your personal needs and circumstances.
For an overview of the seven most common myths, read our article here; you can also find an in-depth explanation of each on our blog.
If you’re interested in learning more, you can sign up for one of our upcoming Principles of Successful Deployments webinars for a more thorough understanding of blockchain, where we will address its strengths and weaknesses and will also answer any questions you might have.