Bitcoin Speed: 7 Transactions Per Second?

I read somewhere that Bitcoin can only handle 7 transactions per second. This works out to 604,800 transactions per day. Visa currently processes about 1,700 transactions per second (and can handle vastly higher amounts than this). This means that the Bitcoin system can handle less than 1/200 of Visa's current processing output.

Is this correct? I find it hard to believe that so many people would buy into a system that's so inefficient / unscalable.

Also, if my assumption is correct, suppose there are (on avg) 700 transactions per second during a given 10 min period (i.e, 70 times the max output rate) does this mean we will need to wait 70 * 10 min for all those transactions to be confirmed? If yes, why can't some evil actor overwhelm (i.e, postpone) the system by submitting thousands of tiny transactions to the network?

• I don't know where you got a rate for Visa of 1,700. Visa's own site says 24,000 per second. Commented Jan 29, 2018 at 16:01

I read somewhere that Bitcoin can only handle 7 transactions per second.

That's roughly correct - only about 7 transactions per second can be confirmed using legacy transactions. With the recent adoption of segregated witness, it could be closer to 30 transactions per second.

I find it hard to believe that so many people would buy into a system that's so inefficient / unscalable.

Some people might have confidence that a better solution will eventually be found. The protocol can be changed with community consensus. Others might find that it is good enough for what they need in the short term (a particular transaction, day trading, etc) and not care what happens in the long term.

Also, if my assumption is correct, suppose there are (on avg) 700 transactions per second during a given 10 min period (i.e, 70 times the max output rate) does this mean we will need to wait 70 * 10 min for all those transactions to be confirmed? If yes, why can't some evil actor overwhelm (i.e, postpone) the system by submitting thousands of tiny transactions to the network?

Transactions are not first-come-first-served. Miners can decide which transactions will be confirmed, and usually this is done by prioritizing them by highest fee. So if the attacker doesn't include competitive fees in those transactions, they will simply never get confirmed and there is no issue. If he does, then the attack is potentially quite expensive for him. And even in that case, honest users who really need their transactions confirmed can simply offer an even higher fee.

I find it hard to believe that so many people would buy into a system that's so inefficient / unscalable.

Nobody cares about efficienty / scalability. Everyone wants to make a profit :)

• again, probably the best comment when people talk about efficiency :-) Commented Jan 29, 2018 at 19:08

I find it hard to believe that so many people would buy into a system that's so inefficient / unscalable.

A lot of people are buying with the expectation that this will improve. Also it is debatable whether or not Bitcoin is trying to compete with Visa. Some people care more about decentralized wealth storage than decentralized cash.

The Bitcoin base layer can handle 7 transactions per second but the infrastructure built on top of this base layer can handle vastly greater amounts.

Batching, layer-2 payments, debits/credits within large custodians like exchanges all facilitate a much higher effective tps.