BPS and TPS — which is more important, and what is their role in a cryptocurrency?
BPS (Blocks Per Second) measures the number of blocks added to a blockchain in a given second. A commonly used metric to evaluate the performance and scalability of a blockchain network. The higher the BPS, the faster the network can process and confirm transactions and the greater its overall throughput capacity.
Transactions per second (TPS) measures the number of transactions a blockchain network processes in one second. A high TPS rate indicates that a blockchain network can process a large number of transactions in a short amount of time on average.
BPS is often seen as the better metric in blockchain systems, as blocks are the fundamental unit of data in a blockchain. A higher BPS value indicates that the blockchain is able to commit transactions more frequently. Therefore, a higher BPS is seen as a sign of a more efficient and secure network.
On the other hand, TPS is a more direct measure of the transaction-processing capacity of a blockchain. It is often used to compare the performance of different blockchain platforms. TPS is a good metric for evaluating a blockchain’s practical utility for applications requiring a large TX throughput.
Analogy: If we say that BPS stands for Books Per Second, this measures how fast a librarian can add books to a library. The pages in the book would be the transactions. The TPS number could change by how many pages are in the book or by how fast the books are added to the library. Also, the quicker the books can be added, the faster the books can be found on the shelf, confirming the books have been added — confirming both the pages/transactions and books/blocks. A page, in this case, cannot be confirmed without being inside the book.
Transactions cannot be confirmed without block confirmation, at least in the battle-proven Nakamoto consensus. In that case, BPS can be argued as the more critical metric and can potentially increase TPS proportionally with an increase in BPS.
However, BPS and TPS are both crucial for decentralization, decreasing the entry barrier for both pool and solo mining. Each helps in its own way.
Speed = Decentralization
By increasing the BPS, you reduce the percentage of mining power required for a sustainable pace of Return on Investment (ROI). High BPS is essential for small miners’ accessibility and entry by increasing the odds of generating a profit for participating in securing the network. The more miners, the more decentralized, especially solo miners. Additionally, Kaspa can support up to NINETY MILLION monthly profitable solo miners. Secondly, the increased block rate dramatically reduces the variance or a deviation interval in time between two blocks, helping with a more consistent reward/revenue generation.
In this case, the benefit of a high BPS would only apply to a single-state architecture, such as Kaspa’s BlockDAG. In sharded systems, the ROI time remains high despite the overall high BPS as the miner has to commit in advance to a chain.
When it comes to pool miners, a high TPS shines. POW chains, especially deflationary ones, block rewards will diminish over time, and fees become the compensation for miners’ work. So transaction fees are expected to increase as time goes on, and so will the waiting time for an ROI that makes sense to cash out due to accruing their fees from the pool (solo mining eradicates this issue). The higher the TPS, the lower the fees. 1000 times higher TPS = 1000 times lower fees.
How TPS scales with BPS is tricky in DAGs. The same transaction can exist on parallel blocks, and only one of the miners will obtain the reward. However, at least 62% of the transactions in each block will be unique, and Kaspa expects to see at least 80% of the transactions be unique. Reference to where 62% came from and the benefits of speed for decentralization can be found at @DesheShai Twitter thread. One of the geniuses behind Kaspa and it’s development.
If Kaspa’s block sizes are the same as BTC, but Kaspa churns out 9000 more blocks than Bitcoin, then the number of unique transactions will be at least 6000 times higher.
Both BPS and TPS play a vital role in maintaining the longevity of POW and are more than just features of a chain. They have significant impacts on the economy, functionality, and ecosystem as a whole.
Tip: Confirmation times can also be associated with blockchain speed. This post was an exclusive spotlight on BPS and TPS since these are common and competitive benchmarks.
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