Why crypto and blockchain perform slower transactions?

This is not a very uncommon question. People usually get confused with blockchain and cloud service.

Could vs Blockchain

The performance of a cloud structure is the sum of all computer nodes (or at least it grows linearly by the number of the nodes in the cloud network).

However, the performance of a blockchain is subject to the least performed node (computer power) even there are thousands of nodes within blockchain network. This is the price to pay for the decentralization. Reader should notice that the performance and computer power here means the capability of smart contract execution not hash rate for mining.

The Technical Reason of Slow Transactions from Blockchain

In order to maintain a ledger (bitcoin is a ledger) without authority, all “qualified” nodes should “vote” for any change of ledger status, otherwise it might cause Byzantine General Problem which was found out by American computer scientist, Lamport in 1982 (in bitcoin, we call this problem as “double spending”).

Decentralized Voting is Consensus

In blockchain we call such voting as consensus. There props and cons for different consensus methods. Lamport’s solution (Byzantine Failure Tolerance, BFT for short) consumes a lot of time. We are not going to too much details on it.

Proof of Work (PoW), used by bitcoin, consumes less time with the price of power consumptions. But bitcoin network still needs at least 10 mins to avoid unstable ledger status based on the internet condition in 2008.

In general speaking, high transaction speed, decentralization and security, you could only choose two of them (quoted from Vitalik, founder of Ethereum network in 2017). Therefore most of early blockchain system choose later two and give up the speed. And this is the exact reason why blockchain performs slower transactions.