Block size refers to the maximum amount of data that a single block in a blockchain can hold. Each block contains a collection of transactions that have been verified and grouped together. The block size plays a crucial role in determining how many transactions can be processed in a given time frame.

For example, Bitcoin’s block size is 1 megabyte (MB), which limits the number of transactions per block to approximately 2,000 to 3,000, depending on transaction complexity. This limitation can lead to slower transaction processing times during periods of high demand, resulting in delays and increased transaction fees.

Larger block sizes can enable faster transactions and higher throughput, but they come with trade-offs. Increasing block size may lead to centralization, as it requires more computational resources to maintain the network, making it harder for individual nodes to participate.

Ultimately, block size is a crucial factor in balancing speed, cost, and decentralization within a blockchain network. Decisions about adjusting the block size can significantly impact user experience and the overall functionality of the system.