Why Is a High Transaction Throughput Challenging for PoW Networks?
A high transaction throughput is challenging for Proof-of-Work networks due to the trade-off with decentralization and security. Increasing the block size to include more transactions leads to larger blocks, which are slower to propagate across the network.
This can increase the orphan rate and favor large mining pools, reducing decentralization. Furthermore, a faster block time to increase throughput can compromise security by increasing the risk of temporary forks and reorgs, which is antithetical to the security guaranteed by the Merkle Root.
Glossar
Low Transaction Throughput
Bottleneck ⎊ Low transaction throughput represents a systemic constraint within a distributed ledger or trading infrastructure, limiting the rate at which operations can be confirmed and settled.
Throughput
Capacity ⎊ ⎊ Throughput, within cryptocurrency and derivatives markets, fundamentally represents the rate at which a system processes transactions or data, often measured in transactions per second (TPS) or orders per millisecond.
High Transaction Throughput
Capacity ⎊ High transaction throughput, within cryptocurrency, options, and derivatives markets, fundamentally represents the rate at which a system can process and settle transactions successfully.
Transaction Throughput
Capacity ⎊ The transaction throughput, within cryptocurrency, options, and derivatives markets, fundamentally represents the rate at which transactions or orders can be processed and settled within a given timeframe, typically measured as transactions per second (TPS).
Proof-Of-Work Networks
Mechanism ⎊ Proof-of-Work networks utilize a cryptographic consensus mechanism where miners compete to solve a computationally intensive puzzle to validate new blocks of transactions and append them to the blockchain.
Faster Block Time
Velocity ⎊ Faster Block Time refers to the architectural decision to decrease the target interval between successive block discoveries, fundamentally increasing the transactional velocity of the network.