Misconception: Transactions now take longer, but would be faster with bigger blocks

TL;DR: Transactions with sufficiently high fees are exactly as fast as they have been since bitcoin exists. Larger blocks have no effect on this whatsoever.

I keep reading that transactions are now slower than they used to be. Even media articles write it, although they should have done their homework and know better.

So let us analyze the statement and get to the root of it. On average one new block is created every 10 minutes. Even if the block size would be increased, this figure would stay the same.

This means that a transaction can get into the next block very fast, if the next block happens to come just after the transaction has reached the miner.

In the less fortunate case the transaction has to wait 10 minutes on average until the next block is created.

However, the 10 minute block interval is only the average. Block intervals follow a Poisson distribution, which has a characteristic long tail. This means that it is quite possible and happens not too rarely that the next block comes only after one hour or even longer. There is actually no maximum time for the block interval.

The bitcoin blockchain is slow.

For some time now blocks have often been full, so not all waiting transactions could get into the next block. Instead they have had to wait until a miner decided to include them. If no miner takes the transaction, it stays in the mempool, together with other unconfirmed transactions, until it is discarded after 72 hours (default setting for bitcoin nodes) or whenever each node decides to discard it.

Miners usually take the transactions with the highest fees per byte and fill up one block. If a particular transaction has a fee that is high enough to be included in a block, it will get in and will be in the next block. This has been so since the invention of bitcoin, has never changed, and will not change even if the block size should be increased. Nothing has ever changed for transactions with sufficiently high fees.

Transactions with insufficient fees, however, have not been able to get into the next block or sometimes into any block at all. It is only these transactions that get delayed or deleted. If you measure the transaction time for all transactions, you will indeed see longer times. And transactions need higher fees to get into a block quickly. This, and only this, is the true core of the statement, but in its unwarranted generality it conceals the facts that transactions with sufficient fees are not delayed at all and that these would not become faster with bigger blocks.

That said, bigger blocks would indeed lower the required fees temporarily, so transactions with fees that are too low now might indeed have a sufficient fee for a bigger block, but this is never explained. Nor are the downsides of bigger blocks explained in this context. It remains a misconception.

So bigger blocks will not make transactions with sufficient fees any faster. They will still be as slow as ever. What can we do about this problem?

The best solution lies in very fast and cheap second-layer payment systems, which need Segregated Witness ("SegWit"), an improvement of the bitcoin protocol, as their underlying base. Once the point of this article is understood, it is also easy to understand why a big majority of bitcoin node operators wants SegWit soon.