I'm wondering why Bitcoin transaction speed doesn't increase (and cost decrease) due to more people becoming miners all the time. Is it because the number of transactions is increasing even faster?
Add a comment
|
2 Answers
No, it is because those are unrelated values. The number of miners (more preciselly the cumulative hash power) influences the security of the network, but not the speed of mining the blocks (in long term). In short term (within the current window of 2016 blocks), it can influence the block generation speed, but after the window completes, difficulty retarget happens, so that the block generation speed goes back to designed avg. time of 10 minutes.
The transactions can not be confirmed faster than blocks are generated, thus block generating speed is very closely related with transaction [confirmation] speed.
Transaction speed is also influenced by number of transactions waiting to be confirmed, but that again is unrelated to number of miners.
Similarly the price is more or less unrelated (assuming enough miners to avoid monopoly). The price (per byte of serialized transaction) is mostly affected by the demand - i.e. the number of other transactions waiting for confirmation and their size and fee used and some other subtle properties.
-
So, it's essentially because of the feedback-loop mechanisms in Bitcoin's design? Commented Jan 13, 2019 at 20:27
-
I'm not sure I understand your question. But for the original question, it is because those are unrelated things. Basically we have a new block created every 10 minutes and such a block is limited in its size, therefore every 10 minutes we can confirm only limited number of transactions. Before a block is mined, you can't confirm any transaction, and then it depends on whether your transaction was included in a block or not.– WapacCommented Jan 14, 2019 at 14:12
The difficulty of finding new blocks is set by a feedback control loop. Every 2016 blocks, the difficulty resets to the value that would have caused the past 2016 blocks to have taken 14 days. This translates to a block interval target of ten minutes. Thus, when more mining power enters the system, it only briefly decreases the block interval until difficulty adjusts to the new level of mining power. Vice versa, when the price dropped earlier this year and a lot of mining power left the system, mining became easier to speed up blocks.
This means that the transaction capacity remains almost constant since Bitcoin blocks have a fixed upper limit. Each block can confirm about 4,000 transactions (at an average of roughly 500 bytes). However, there were some capacity gains resulting from more efficient use of blockchain space, e.g. by a higher portion of segwit transactions, use of batching, better use of non-peak times to consolidate funds, and budding use of second layer technologies.
So, generally, the expected time until your transaction is confirmed is ten minutes if your transactions is among the ones that will be included in the next block, otherwise longer.