Bitcoin can process an average of about 12,000 transactions per hour, or about 288,000 daily. Its peak capacity is about seven transactions per second, or a maximum 604,800 transactions per day. The value of these transactions consistently exceeds $1 billion daily, according to Blockchain.com.
In contrast, the payment network processing the most money in the world, FedWire, settles approximately 811,000 transactions worth $3.9 trillion every day. Although FedWire does not operate ‘round-the-clock, the US Federal Reserve has announced plans for a 24/7 payment service called FedNow for July 2023.
Read more: FedNow is coming next year and the feds hope it’s a crypto killer
Blocks of data on Bitcoin’s ledger contain an average 2,000 transactions. Miners process blocks about once every ten minutes. According to Blockchain.com, average confirmation times range from 3.5 minutes to 13.2 minutes.
Miners will typically choose the transactions with the highest transaction fee per byte to include in the next block. Fees are based on how many bytes a transaction uses and how fast the sender wants to send the bitcoin rather than the “dollar value” of the transaction.
If the Bitcoin network is not very congested, someone may settle tens of millions of dollars’ worth of bitcoin within an hour for less than $1 in fees. This certainly beats the capability of FedWire today.
Importance of scaling Bitcoin transactions for everyday use
The growth of Bitcoin as a financial settlement layer is impressive, yet more growth is needed to make it competitive with “mainstream” interbank settlement services like FedWire.
A few years ago, SegWit effectively doubled Bitcoin’s data processing capability. Bitcoin’s prior 1MB block size limit increased to 4 million weight-units (WU) which had the effect of doubling usable block space to about 2MB if every transaction used SegWit.
The increase in block size did not entirely prevent congestion, of course. The mempool, which…
