The race for speed superiority in the world of Cryptocurrency

The race for speed superiority in the world of Cryptocurrency

In the world of Cryptocurrencies and Blockchain, transaction speeds are something of great importance. They’re often flaunted as a key selling point for many coins and is their key feature when trying to attain market dominance.

Today’s financial climate and payment systems are focused on speed. Speed is everything. Contactless payments, instant transactions and fast worldwide transfers are used and preferred by users these days. People even avoid chip and pin whenever possible!

Speed is an area where centralised and decentralised systems co-exist. Banks and payment channels work effortlessly to make processes as quick and as smooth as possible for customers.

Cryptocurrencies have adopted the same ideology and drawn from the centralised world, prioritising speed and ease of use to provide a better service.

When it comes to coins offering micro transactions, speed is king.

Speed is often combined with microscopic fees, making these coins ideal for sending money worldwide and for those seeking speed when it comes to completing transactions.

The speed of a coin is measured by TPS (Transactions per second), a relative figure that can be scaled on some coins to match supply and demand.

Bitcoin offers around 6-7 TPS and Ethereum 8 TPS, remarkably slow compared to the market leaders such as Ripple, which offer up to 1500 TPS.

Many people are now using Cryptocurrency to send money around the world with minimal fees, anonymity, secure networks and extraordinarily quick transaction times.

“Imagine being able to send money rapidly and easily to a friend in Australia without paying hugely inflated fees? That’s the dream? Right?”

It’s not all about speed

The block size and confirmation times are an important indicator of the potential TPS of a coin.

The lower the block size, the faster the blocks can be confirmed onto the blockchain. The faster the confirmation, the faster the transaction.

Other variables determine the speed of a coin too; Scalability, accessibility on exchanges and ease of use also heavily determine how fast the coin is and the amount of people using the payment channel.

A large customer base and marketability is also very important when it comes to micro transactions as the more people using the payment channel, the more accessible and accepted it becomes .

Current payment channels such as Visa offer up to 24000 TPS, a figure that can be scaled to match supply and demand.

Compare that to the 1500 TPS offered by Ripple, the current market leader in micro transactions, and you’ll see that Visa is miles ahead.

However, other payments such as Paypal can only handle around 200 TPS. This can be matched and beaten by many coins on the market.

The Lightning Network

For Bitcoin, the lightning network could be its saving grace.

The lightning network essentially allows users of Bitcoin and Litecoin to complete transactions between two parties off of the blockchain. This dramatically reduces wait times for block confirmations as the transactions isn’t finalised on the blockchain.

The lightning network itself makes a record of the transaction, describes the final process to the Bitcoin network and then completes the transaction later by securing the balance on the blockchain.

Being outshined by other coins on its main selling point, transactions and payments, the Lightning Network has allowed for transaction speeds and block confirmations to be reduced to 1-2 minutes.

This is a far cry from the dreaded 10 minute confirmations Bitcoin customers are used to.

Who are Visa’s competition?

There are four coins that tick all the boxes when it comes to speed and competing with Visa; Stellar, Nano, Litecoin and Ripple. These coins all offer fast transactions, a large customer base, easily accessible purchases and simple, easy to use interfaces when making payments.

Stellar Lumens – XLM

Stellar is the rising star of the micro transactions market. Their focus is to be the market leader in low cost mobile payments and micro transactions worldwide.

Transactions are confirmed within 5 seconds, fees remain at a minuscule $0.001 and allows for the facilitation of low-cost payments and the exchange of money between borders and through various currencies.

Stellar offers 1000-3000 TPS, allowing for the seamless exchange between users of their native currency XLM.

They plan to open their own decentralised exchange (DEX) and have announced partnerships with IBM, Deloitte and a number of other multinational businesses.

Nano – NANO

Nano is the new kid on the block when it comes to micro transactions. Following a recent rebranding from Raiblocks to Nano, they have shown to be able to facilitate an astronomical 7000 TPS on their current hardware.

Nano have the very real potential to being able to disrupt Visa’s market share if it can remain scalable.

Nano’s advantage comes from Block Lattices, meaning that each Nano address is its own blockchain and record of transactions.

Offering zero fee transactions, exceptionally quick confirmations and a simple platform that anyone can use, I can see Nano being scaled much higher in the future to match the huge demand this coin will generate.

Litecoin – LTC

Despite a low TPS of 56, Litecoin is fast becoming the preferred method of payment for businesses worldwide. Known as ‘Bitcoin Lite’, think of Litecoin as the silver to Bitcoin’s gold.

Recent breakthroughs in SegWit and the Lightning Network have pushed Litecoin to the forefront of micro and large transactions.

Litepay, the integrated payment channel for Litecoin, is being released in March 2018 and will facilitate Litecoin payments for businesses and users alike. Litepay allows for low fees, fast confirmation through Segwit and the swiftness of the Lightning Network.

Ripple – XRP

Ripple is a controversial choice here but there’s no denying the speeds and effortless transactions that they can offer. Known as a centralised coin, banks and major businesses have shown great interest in using Ripple as a payment channel.

Their advantage is their scalability, which ranges from a current TPS of 1500 to a potentially infinite number based on software and hardware developments.

Ripple has partnerships in place with a modicum of leading banks and the payment channel MoneyGram, with the impetus on allowing users to send money around the world and then convert to XRP for added simplicity.

The battle for supremacy

These coins are the current market leaders in micro transactions. However, in the ever-evolving world of Cryptocurrency and payment channels, a new coin could come along and dethrone the market leaders at any time.

If Nano can fulfill their promises, I can see them becoming the market leader in micro transaction payments. Integration and implementation of the technology into the mainstream and adoption by a large brand or company will see them cement their position.

The technology can be introduced wherever a mobile payment can be made, either through your phone or via contactless and QR codes.

This opens up vast realms of possibilities for coffee shops, schools, universities, retailers and shops. The possibilities are nearly endless.

As new breakthroughs emerge and technology evolves, the rapidly evolving sectors of fast networks and instant block confirmations will have to adapt to current market trends and strive to meet rampant customer supply and demand.

If coins and networks cannot scale to match the supply and demand of transactions then they will hit a roadblock when it comes to processing transactions.

The future of blockchain is speed and scalability.

Stay slow or get left behind for good.

All four of these coins are available to buy on exchanges. You can buy Bitcoin and Litecoin on Coinbase and then send it to Binance to buy NANO, XLM and XRP.

If you have any predictions for other coins, want to talk about Cryptocurrencies or need any help in getting set up for investingtweet me on Twitter, leave a comment below or reach out using the contact page. Thanks!

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