How Bitcoin Transactions Compare to FedWire

How Bitcoin Transactions Compare to FedWire

Bitcoin can process an average of about 12,000 transactions per hour, or about 288,000 per day. It has a maximum capacity of about seven transactions per second, or a maximum of 604,800 transactions per day. The value of these transactions continuously It exceeds $1 billion a day, according to

In turn, the payment network that processes the largest amount of money in the world, FedWire, adjustments Approximately 811,000 transactions worth $3.9 trillion per day. Although FedWire does not operate around the clock, the US Federal Reserve announced plans for a 24/7 payment service called FedNow in July 2023.

Read more: FedNow is coming next year and feds hope it will be a crypto killer

The blocks of data in the bitcoin ledger contain an average 2000 transactions. Miners process the blocks around Once every ten minutes. According to, average confirmation times Domain From 3.5 minutes to 13.2 minutes.

Miners will usually choose the transactions with the highest transaction fee per byte to include in the next block. The fee depends on the number of bytes a transaction uses and how quickly the sender sends bitcoin rather than the “dollar value” of the transaction.

If the Bitcoin network is not too crowded, someone could settle tens of millions of dollars worth of Bitcoin in an hour for a period of time. Less than $1 in fees. This definitely beats FedWire’s ability today.

Importance of Scaling Bitcoin Transactions for Daily Use

Bitcoin’s growth as a financial settlement class is impressive, but further growth is needed to make it competitive with “mainstream” interbank settlement services like FedWire.

A few years ago, SegWit effectively doubled the processing power of Bitcoin data. The previous 1MB Bitcoin block size limit increased to 4 million Weight Units (WU) doubling the usable block space to about 2MB if every SegWit transaction was used.

The increase in block size didn’t completely prevent crowding, of course. mempool, which caches unconfirmed transactions, swelled in 2013, 2017, and 2020. This increase in congestion had a side effect Transaction fee increase.

Some hope that Layer 2 or Layer 3 solutions will help scale Bitcoin. These solutions write outside the blockchain and preprocess the data only on the underlying blockchain (Layer 1) Bitcoin when necessary.

Layer 2 Scaling Solutions – Including Bitcoin’s Most Popular Layer Two, The Lightning Network – Could Bring Bitcoin Closer to Peer-to-Peer Electronic Cash the system for daily transactions.

With a Layer 2 solution like Lightning, Bitcoin owners who currently use the technology as a store of value can switch to using it for everyday purchases when they can easily buy coffee with it.

As many hope so Changes in the tax code It can help increase the usefulness of Bitcoin; Currently, there is no minimum tax exemption for Bitcoin transactions in most developed countries, so each transaction must be detailed and reported to the tax authorities.

Read more: Bitcoin developer has a fix for Lightning’s existential problem – offline payments

Transaction fees are the key to long-term security

The Bitcoin transaction fee market is important to combating certain types of mining attacks. Nodes can reject blocks that do not follow the consensus rules baked into the Bitcoin code. However, miners can attempt various forms of a majority (“51%”) hash attack that injects blocks with empty or malicious transactions.

This type of attack competes with legitimate miners who seek the incentive of transaction fees as well as support for the Bitcoin block reward to include transactions in the blocks.

More decentralized than smaller digital assets

Bitcoin nodes and mining rigs are located all over the world. More than 10,000 full bitcoin contracts are can reach On all six permanently inhabited continents. The United States and Europe have the highest concentration of Bitcoin full nodes.

Less decentralized coins tend to have weaknesses that make them more vulnerable to attacks such as scary double spending. bitcoin fork, bitcoin cash, suffer Double Spending Attack The exchange cost is $12.4 million On July 17, 2022. Same thing before Event In May 2019, Bitcoin Cash never solved the issues that led to this happening – including the failure to increase the hash rate intended to secure its alternative version of Bitcoin.

Bitcoin remains the world’s most valuable blockchain, with transaction settlements worth tens to hundreds of billions of dollars every month. While the value of the dollar Still a small part of the amount That FedWire processes daily, it can compete with mainstream settlement options if it continues to expand with tier 2 solutions.

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