Everyone in the cryptocurrency world has experienced the anxious wait for a coin to be transferred into their wallet. At the height of the bull market of cryptocurrency, it sometimes took a few days for cryptocurrency to transfer. This is a huge issue as the crypto world is very volatile. During the time it took for the transaction to go through, the coin’s price could have already fluctuated a lot.
The total amount of time it takes to complete a transaction is called the transaction speed. Before we explore the variables in transaction speed, let’s identify the different types of transaction speed.
There is average transaction speed, actual transaction speed, theoretical transaction speed, and claimed actual transaction speed. The average transaction speed is what the coin is handling on average, the actual transaction speed is what the coin could handle per current mathematical calculations, and the theoretical transaction speed is what the coin could handle if everything goes right. The claimed actual transaction speed is what the coin can handle as claimed by the development team without any evidence or network volume. As one could imagine, many development teams often boost the theoretical or claimed actual transaction speed. However, the users of the coins are better off being practical and look at the average transaction speed or the actual transaction speed. An example of a coin with a very different type of actual transaction speed and theoretical speed is Ripple. The development team claims that Ripple can handle 1,500 transactions per second. Ripple’s transaction time confirmation is about 4 seconds. The claim by the development team was never proved in the real world. And most of the time, the confirmation time is over one minute. And in July of 2017, the development team even claimed that it could handle more transactions than Visa at 50,000 transactions per second. Yet, the public had never seen this happen.
The average transaction speed and actual transaction speed could differ depending on the type of coin, current average fee, network condition, current transaction volume, and transaction type being included in the block’s creation.
The type of coins has a lot of to do with the transaction time. Let’s use Bitcoin and Ethereum as an example. As Bitcoin is the first cryptocurrency, it bears one of the slowest transaction speeds out there. Bitcoin currently processes about 3-7 transactions per second and then 2-6 seconds for confirmation. In the case of Ethereum, it can handle about 15-20 transactions per second with anywhere from 10-50 seconds for confirmation. The amount of time used for the confirmations can be dependent on the amount of coins being transacted. The higher the fee is, the more motivated the miner is for verifying the transaction. It could sometimes take days for the transaction to go through if the network is congested and there is a low amount of fee.
Of course cryptocurrencies such as Bitcoin and Ethereum were never invented to be widely used like Visa. Visa can handle 24,000 transactions per second based on an IBM testing conducted in 2010. However, the community of Bitcoin and Ethereum have been complaining on many forums so both coins have been attempting to increase the transaction time to solve the scalability problem. Bitcoin had used forking to increase its block size limit while Ethereum is attempting to scale by sharding, which will break the blockchain up into smaller units. Both forking and sharding are supposed to improve the network speed over time.
The transaction speed also depends on the exchange you use to transfer the coins. Not all exchanges are built the same way. If it has been awhile since you transferred your coin but it is still “pending”, just wait. There is a huge chance that you have done everything correctly, but the stars just aren’t aligning for the transaction speed.