Throughput

Understanding Throughput

Throughput is a performance measurement that quantifies the number of completed actions within a specified timeframe. In the realm of blockchain technology, transaction throughput pertains to the velocity at which a blockchain processes transactions. This is typically gauged in transactions per second (TPS), but can also be denoted in minutes (TPM) or hours (TPH).

The transaction throughput of a blockchain platform is contingent upon its chosen consensus mechanism. For example, a proof-of-work (PoW) blockchain like Bitcoin exhibits a lower throughput in comparison to a proof-of-stake (PoS) network like Cardano. Other factors that impact throughput encompass the blockchain’s block size, the level of network traffic, and the complexity of transactions.

It is worth noting that network traffic refers to the volume of load on the network at any given moment. Elevated levels of traffic result in slower speeds, whereas reduced traffic levels facilitate faster transaction processing.

Interestingly, there are scenarios where slower blockchains like Bitcoin can execute transactions more expeditiously than Ethereum. This is due to Ethereum’s capability to handle intricate transactions such as the creation of non-fungible tokens (NFTs) and trading on decentralized exchanges (DEXs). These types of transactions necessitate greater computational power and consequently strain the network more.

To enhance a blockchain’s throughput, developers employ various techniques including rollups, sidechains, state channels, the implementation of novel consensus mechanisms, and augmenting the block size.