Often you will find a number of comparative analysis between Visa and Mastercard’s transaction throughput vs. blockchain’s throughput in unit of transactions per second.
You can search for the information about the average size of credit card transactions; about 500 bytes in average and its throughput; 5,000 transactions per second.
What these figures translate to in terms of blockchain (example: QWC) is like this,
5,000 txs per second x 60 seconds per minute x 2 minute per block. This translates to 5,000 x 60 x 2 = 600,000 transactions per block.
The size of each block has to be close to 300 Mb per block.(600,000 transactions per block x 500 bytes per transaction)
The current block size of QWC is 1Mb and it can hold up to about 1,000 transactions per block. If you look at it this way, the blockchain’s performance seems really slow. The more decentralized a blockchain is, the slower its performance can be.
However, it is not the case and I would like to propose a counter-argument for this kind of analysis.
For credit card transactions, the assets are not really moving. It is the credit that is given to users and the balance is charged to users on a monthly basis. So the actual transactions of assets from bank accounts to credit card company’s accounts take place based on contractual billing cycle, which is normally once a month per account.
The credit card throughput is so called authorizations. Not transactions. The balance information is stored in a centralized database and is the summation of all balances within the billing cycle.
What operates like credit card systems in crypto space are exchanges. You make a deposit for credits and issue authorizations for both inputs and outputs in the database. After a certain trading cycle is finalized, you transfer the coins(or assets) to your wallet(s) using a secure transaction. The throughput of major exchanges can be well over 1 million authorizations per second.
On the contrary, when you send coins over a blockchain through your wallet, various transactions in the blockchain are stored in memory pool until they are included in blocks and they are irreversible transactions (meaning you cannot cancel transactions once it is broadcast in the network) even though it is not yet included in the blocks and the balance is deducted immediately. So each transaction is equivalent to a transfer of an asset on blockchains that can guarantee that your transactions will be included in future blocks.
The more appropriate comparison of transaction throughput of blockchains will be that of banks. As we all know, there are many restrictions in banking systems and when you have to move large amount of assets or make cross-boarder payments, it will take a long time and sometime requires some documentation because they are movements of assets, unlike credit card transactions.
Do you still think blockchains have to handle a larger number of transactions faster than credit cards? In my opinion, the answer is no. Exchanges should take care of that part as it also provides monetary liquidity to its users.