For over a decade now, Bitcoin (BTC) has remained the most dominant blockchain product. However, the liveliest and busiest area in the entire crypto industry is nowadays the Ethereum network. That’s because Ethereum allows smart contracts to be coded on top of its blockchain, broadening the operational scope to many real-life use cases.
All Ethereum-based systems use Ethereum’s native coin, Ether (ETH), as a driving force for achieving mutual communication among its participants. More specifically, Ether is the payment currency for facilitating transactions that run on the Ethereum blockchain and is the second-largest cryptocurrency on the crypto-exchange market.
And just like any other business model, the performance of Ethereum is greatly measured by its time efficiency. That’s why today, we’re discussing the time rate at which ETH is being handed from one user to another.
Before we start, remember that the cryptocurrency itself is also referred to as Ethereum, so don’t get confused by the interchangeable use of the name throughout this article.
The Ethereum Blockchain
By the time Ethereum went live in 2015, there had already been a range of cryptocurrencies levitating around the awakening crypto scene. While the majority of existing crypto projects like Litecoin (LTC) focused on improving Bitcoin’s flaws, the young crypto enthusiast Vitalik Buterin believed that the blockchain could be more than just a database for transaction records.
So, Buterin and his team of developers built an underlying technology capable of keeping backend code for different apps on its network apart from serving as a tradable asset. This layer of additional functionality is powered by Ethereum Virtual Machine (EVM) — a software platform that acts like a decentralized computer enabling developers to build apps using the programming language Solidity.
The most basic form of these apps is smart contracts — powerful self-executing programs that enable interaction between two users in an automated and trustless manner. As such, they can be used as a basis for building more complex decentralized finance (DeFi) platforms, decentralized autonomous organizations (DAOs), ERC20 crypto tokens, non-fungible tokens (NFTs), and initial coin offerings (ICOs).
All decentralized apps (dApps) can find applications in numerous mainstream industries like real estate, financial management, and virtual escrow providers because of their immutable and trustless nature. That’s the reason why experts suggest that the world is likely to go fully decentralized. As of now, the Ethereum technology is most frequently applied in the crypto industry as a basis for new tokens, AMM protocols and other forms of decentralized exchanges and crypto-wallets.
Proof-of-Work (PoW) vs Proof-of-Stake (PoS)
Now, you may think that it must be difficult for a single network to accommodate such a diverse range of transactions. And to some extent, you’re right since Ethereum has grown faster and larger than expected.
Same as Bitcoin, the Ethereum blockchain is currently using the Proof-of-Work (PoW) consensus as a mechanism for validating transactions without a centralized intermediary. This process is what we popularly call mining. Ethereum mining is performed by nodes (mining computers), who solve complex math equations (re-converting a function) and get rewarded with newly-minted ETH coins for their contribution. After each successful verification, miners record transactions in blocks and attach them to the blockchain in chronological order.
Unlike the original Bitcoin blockchain, which utilizes the SHA-256 algorithm, the Ethereum PoW machinery runs on Ethash — a modified version of two older algorithmic systems Hashimoto and Dagger, which use the Keccak hash function. This makes Ethereum a bit superior to Bitcoin in terms of speed, but not enough to “feed” the entire industry Ethereum produces. Finally, the transaction fees paid in Ether, which are called gas fees in the crypto lingo, are rising in proportion to the network and this costly environment is becoming unsustainable for day-to-day transactions.
For that reason, Ethereum is currently transitioning from PoW to Proof-of-Stake (PoW) consensus, which will transform the process of verifying transactions and hence, minting new ethers. Instead of mining, participants will validate transactions by staking their already acquired ETH capital, and this will ultimately result in a more scalable and sustainable network.
Removing mining will reduce the environmental impact that Ethereum causes, regulate the supply balance of new coins and, finally, increase the speed of ETH transactions.
Before we start discussing the current PoW time parameters, you should know that with the merge from ETH to the ETH 2.0 upgrade, there won’t be any difference whatsoever in the final product — regardless of the minting process, the same digital currency will continue to be used.
How Long Does It Take to Send Ethereum?
As implied in the previous section, the Ethereum network can process transactions faster than Bitcoin. While Bitcoin can receive 5 transaction messages per second (TPS), Ethereum’s numbers range between 13 and 15 TPS.
The thing is that this number may seem encouraging, but it doesn’t reflect the real-time your transaction needs to be completed. The real confirmation time is very variable — from 1 minute to 30 minutes.
First, it all depends on the departure and destination point of your ETH coins — whether they travel from one independent wallet to another wallet or a cryptocurrency exchange.
If you’re sending Ether to a private wallet, the transaction time also depends on what type of wallet the sender and recipient are using. Hot wallets are readily connected to the internet, so the transaction is expected to be considerably faster than sending coins from a cold hardware wallet, which needs to be set up first before starting processing the incoming transaction.
Once the internet connection is regulated, a regular wallet-to-wallet transfer shouldn’t take longer than 6 minutes. In modern crypto “traffic”, this is considered lower-average speed given the fact that there are much younger and faster digital assets like Solana (SOL) or Ripple (XRP).
Multiple Confirmations on Crypto Exchanges
Ethereum transfers to a cryptocurrency exchange last much longer, and that’s because of an internal factor that these exchanges employ — confirmations.
Let’s move back to Ethereum mining for a second. As we explained in the previous section, when you send a transfer request to the network, your transaction goes through the “hands” of miners, who need to confirm its validity. After completing one confirmation, your transaction is ready to join the blockchain. However, every next block added after the original confirmation makes a further validity-proof of your transaction.
That’s why high-established crypto exchanges usually require a set of additional blockchain confirmations to approve your transaction as a means of added protection. The number of confirmations is set individually by the exchange.
For example, Binance requires 12 confirmations, Kraken 20, while Coinbase needs 35 to approve your ETH transaction. All exchanges claim that this process won’t take longer than 10 minutes, which is not always the case as other factors affect the “journey” of your Ethereum, regardless of whether you’re interacting with a centralized exchange or directly with a fellow trader.
Other Factors That Influence ETH Transaction Times
Remember that the given minutes are only average numbers on the cumulative Ethereum stats. The speed of the Ethereum network can be affected by a few internal factors triggered by a single external factor — network congestion.
The fact that blockchain transactions are “packed” in blocks regulates the number of transactions that can be processed in a pre-defined transfer time. This number is called block size, and it’s not always fixed on the Ethereum blockchain as the block can expand and shrink depending on the current network traffic. Developers have set some limits in the form of an average size of 15 million gas or nearly 1MB, yet real-world charts sometimes show different numbers. For example, at the beginning of 2022, Ethereum’s block size ranged between 81KB and 119KB, according to EtherScan.
By definition, the block time is the average time miners need to solve the PoW puzzle and record the new block on the blockchain. That’s in fact, the amount of time we use to calculate the TPS parameter, which depends mostly on the difficulty level of the equation given to miners. In the Ethereum ecosystem, a new block is added every 12-15 seconds.
Apart from the newly-generated coins in the mining process, Ethereum miners also receive rewards from the transaction fees that participants pay each time they want to transfer the ownership of their coins or change the storage location to another Ethereum wallet.
When you use a crypto exchange to facilitate your ETH transaction, the exchange itself will calculate the transaction fees based on the current network status.
However, independent wallet users have an option to adjust the amount of their transaction fee or, in simpler terms, to “legally bribe” miners to process their pending transaction with priority. When users send the request to the network, they can also add a tip besides accepting to pay the base fee. It’s simple — the greater fee you pay, the faster the transaction. It may seem unfair, but this auction system can greatly affect the estimated time for completing an Ethereum transaction.
A Few Words Before You Go…
Ethereum didn’t enter the scene with that revolutionary hype as Bitcoin did, but in the long run, it will be the backbone of the entire decentralized architecture that experts predict to happen sooner than we imagine.
Ethereum has all prerequisites to reshape virtual reality — robust security, transparency and incredibly large usability. However, the inability to scale up amid high network demand — without reducing the transaction speed — is the greatest challenge for Ethereum to realize its potential.
Hopefully, the ETH 2.0 upgrade will settle all major scalability issues and place Ethereum among the most revolutionary inventions of the 21 century.