There are several key areas that will affect the performance of blockchain, includes p2p network communication, the efficiency of encryption and decryption, consensus mechanism, transaction verification mechanism and so on. ### Peer to Peer Network Commuication Normally, Peer to Peer network are mainly unstructed with no specific topology. If someone want to send a transaction to another person. The blockchain such as Bitcoin or Ethereum is peer to peer network. How will the transaction get to the rest of the blockchain community? Think of it like how gossip would spread. There are a bunch of people (nodes), and when one of them knows something, they tell it to the few others(8~128 nodes) that they are closed to (peer nodes). Then those people tell a few more people the message that was told to them, and then… Eventually everyone knows about the original information (transaction).

When we say peer to peer network communication of blockchain, we mean that all the nodes that connect with other peers. After peers exchange their information (validating all transactions in some rules), they store it. Eventually, all full nodes store the same data. In order to maximize the trading performance, we can specify the physical configuration of the node machine and the number of nodes, and try to connect with high-speed network.

The efficiency of Encryption and Decryption for blockchain

In the age of the internet there are several cryptosystems. we mainly use two kind of cryptosystems. however the so called public-key cryptography (also called “asymmetric cryptography”) is the one used in blockchain in order to encrypt and sign the transactions. We know that there are RSA, DSA, elliptic curve algorithm. The blockchain generally use elliptic curve algorithm, including ECDSA and SCHNORR, as well as the country secret algorithm (SM2 elliptic curve public key cryptosystem, SM3 cryptographic hash algorithm, SM4 block cipher algorithm). Among then, Bitcoin blockchain uses more elaborate asymmetric cryptosystem, called Elliptic Curve Digital Signature Algorithm (ECDSA). the signature algorithm used by bitcoin is ECDSA, while Schnorr signature verifies faster than ECDSA signature, and this signature size can be smaller and supports multiple signatures recursively.Another technological component of a blockchain is the cryptographic hash function,such as SHA family algorithm, MD5, SCRYPT, RIPEMD, WHIRLPOOL, CUCKOO HASH, HAVAL, Tiger, LYRA2, Equihash, Hashimoto, Dagger and Ethash. These algorithms are used in series or in parallel. As commercial applications generally do not consider the issue of mining ,but pay more attention to performance issues. it is recommended that you base on SHA256 algorithm commonly. However, There is not one Encryption algorithm which is the most efficient in all applications. Moreover Efficiency is not the most important measure when it comes to Encryption algorithms.We cannot use a algorithm just because it is the most efficient.We have to consider other measures such as security,reliability,world wide acceptance etc.

Consensus Mechanism:

A poor performance would happen , based on the design of the consensus algorithm, it may require more time under certain conditions for consensus to converge. These conditions could be dynamic where other nodes have turned malicious or a network partition may delay messages that are exchanged between nodes. Therefore , there are some typical consensus algrithom that is used in different blockchain: PoW to PoS to DPoS and various Byzantine fault tolerance algorithms. Those consensus mechanisms do continually to innovate. blockchain platform performance has also been significantly improved. Under the consensus mechanism similar to DPoS or PBFT, the blockchain transaction is validating rapidly and the transaction throughput almost meets the existing financial transaction scale. In some private blockchain case, the performance reaches tens of thousands of transactions per second, almost meets most of the business needs.

Transaction Verification

From the perspective of transaction verification mechanism, there are several optimization methods:

1. Sharding, the general idea is that each node only handles part of the transaction, such as part of the account initiated transactions, hence, reduce the node’s computing and storage burden.

2. Lightning Network and State Channels, these two strategies solve scalability of blockchain , being capable of millions to billions of transactions per second across the network, by transacting and settlingout off the blockchain.

Bitcoin,Ethereum, Ripple ,HyperLedger fabric and Corda, each of this blockchain, there throughput and other performance improvements have been greatly enhanced through consensus algorithm innovation and consortium blockchain deployment, hence, current delays up to seconds and throughput up to 10 million Per second. The storage requirements of a single node can also be optimized accordingly. Thus, performance bottlenecks have been gradually broken through.