How much faster is Stellar compared to other blockchains?
If you’ve just started using XLMwallet and XLM in general, you might be shocked by the speed. After Bitcoin and Ethereum it’s like getting out of a horse-drawn cart and getting into a Boeing. But what makes Stellar so lightning-fast?
As you might now, the Bitcoin blockchain only processes about 7 transactions per second. Since you need quite a few confirmations for a transaction to go through, you’ll have to wait about an hour to get access to your money. Ethereum is a tad better: it processes 15–20 operations per second, so you’ll just need to wait a few minutes. But it’s still far too long compared to Visa and Mastercard, which have a speed of thousands tps.
Stellar is one of the very few blockchains that can compete with global payment systems. On standard equipment, it delivers about 1500 tps. For comparison: Visa processes about 2000 tps under normal conditions. When running on top-grade equipment, Stellar easily reaches 4000 tps. That’s incredibly fast for a blockchain.
Why can Stellar do what Bitcoin and Ethereum cannot? The answer is both very simple and very complex. In a few words, Stellar doesn’t rely on mining.
In both Bitcoin and Ethereum networks, miners add new blocks to the chain by solving cryptographic puzzles. All miners are working on the same puzzle at the same time. The puzzles are designed in such a way that finding a solution is hard, but once it’s found, it’s very easy to verify. Whoever is the first to solve the puzzle gets the block reward and adds a new block to the chain. This consensus protocol is known as Proof of Work.
Now, the number of confirmations is the number of blocks that were added to the chain after the block that contains a certain transactions. So for example, if your payment makes part of block number 100, and the required number of confirmations is 3, it means that your transaction will be fully processed and confirmed once block 103 is added to the blockchain. This is for security reasons: it reduces the risks of so-called double-spend attacks.
Unfortunately, it also slows the system down. If the average block time is 10 minutes (as it is on Bitcoin) and you need 3 confirmations (3 blocks), then you’re looking at half an hour at least. This mechanism makes the system safe, but it also prevents scaling.
The solution planned for Ethereum is to switch to Proof-of-Stake — another consensus protocol, without any puzzles. It can theoretically increase the processing speed to thousands of tps — but it’s still years away.
Stellar, however, is already there. It managed to get so far ahead because it went on a completely different path. There are no puzzles to solve, and no new lumens are generated. All of the hundred billion lumens were generated at once, in the very beginning. There is no mining at all. The consensus protocol is neither Proof of Stake nor Proof of Work. It’s called SCP (Stellar Consensus Protocol), and it’s based on something called a Federated Byzantine Agreement.
The SCP is not easy to explain, but in our next posts we’ll try to do that. For now, remember that when you use xlm wallet, you get access to the fastest and cheapest blockchain on the market — Stellar. See our site https://xlmwallet.co/ for more info.
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