Bitcoin has made a place for itself in the brand new fintech world owing to its speed, efficiency, distributed ledger system, decentralized network, lower and insignificant transaction and processing fees and much more. If you actually run a particular Bitcoin node on not a simple home desktop but a high end and high speed server, the results can be quite astonishing. The number of transactions that are currently pulled through in the real world would in such a scenario, blast through the ceiling. Even a present high speed Bitcoin node can be further scaled up to allow for the processing of way more transactions than what actually takes place in the real world right now.
There are several misconceptions regarding what actually matters when trying to figure out the number of transactions that can be made on the Bitcoin network per second. The hashing algorithms’ relative computational speed does not determine the number of transactions that can be made per second. If a platform is running on such a fast algorithm it simply means that the token miners can manage to make more hashes per second when compared to a simpler hashing algorithm working on exactly the same hardware.
At the end of it, what determines the number of transactions per second is not the hashing algorithm but is directly correlated to the block size of that particular blockchain, transaction size and average block time.
Theoretically about 7 (Number of transactions)
Any average transaction requires about 250 to 500 bytes of data. One Bitcoin block in the blockchain can have not more than 1 MB of data. On an Intel Core i7 quad core, the Bitcoin platform can work through about 8000 signature verifications every other second. The number of transaction per block hardly ever cross the 3000 mark. Scaling this down to seconds, this roughly translates to about 5 to 6 transactions per second.
Clearly such a low number does not hold the capacity to handle transactions on a larger scale. This could also be the reason for the faster working of the network right now but because of the ever growing user base of Bitcoin, it has already started facing pressure and beginning to form cracks in its infrastructure. Eventually, if one wishes to make it a mainstream thing, several optimizations need to be made so as to adapt it for a larger audience to be catered and this mostly requires research and development in the scalability issues which if not tackled with, would not allow Bitcoin to be setup on a larger user base. Moreover, more and more unconfirmed transactions are getting logged up on the network and transaction and processing charges are increasing day by day. It is not very difficult to see that the current Bitcoin platform has gotten saturated and reached its utmost peak limit.
The most vital and urgent plans that the Bitcoin network needs to work upon is its scalability. The network is handling an increasing amount of traffic every passing day since more and more people are getting interested over this. The Bitcoin platform was originally designed to simply support lightweight clients. These clients were expected to process only simple and small blocks of the blockchain. That being said, this infrastructure has worked well over the past 10 years but now with increasing enthusiasm and more developments taking place in the Bitcoin space, scalability is causing issues.
VISA handles about 2000 transactions per second whereas PayPal handles about 10 million transactions per day. Now if Bitcoin aims to be launched as a fiat currency and aim to replace existing currencies like dollars and such, if for suppose a huge nation like the United States was to rely upon Bitcoin money to pay for their food and medicines daily, the current Bitcoin infrastructure won’t be able to withstand the pressure. Quick transactions are vital for quick payments and fast delivery of food and medicines for a nation to survive and for Bitcoin to be deployed in the future, its long term plans should mainly focus on scalability issues. The current restriction on Bitcoin would not allow more than 7 transactions to be passed per second and that is just not what a fiat currency should look like.