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Is there a significant performance difference between Truecrypt encrypted drives using only AES vs disks that use a triple algorithm scheme like AES-Twofish-Serpent?

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The Twofish and Serpent stages will significantly reduce performance, compared to simply using AES alone, as the data must pass through three encryption algorithms rather than just one. This difference is magnified if your processor supports the AES instruction set, which accelerates AES encryption and decryption in hardware.

You generally don't need the additional security provided by triple encryption unless the data truly are extremely critical. If you follow best practices, such as using a sufficiently long and complex password, there should be no security concerns using one of the encryption algorithms alone. AES is computationally infeasible to crack, and likely will remain so in the foreseeable future; this is even more so with Serpent and Twofish.

See also: Which TrueCrypt Algorithm is the safest?

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The truecrypt benchmark shows about 3gb / sec for AES, 450mb/sec with the others, 400mb / sec with one combined and 200mb / sec with all three. Does that matter if your unencrypted drive can only deliver 60mb / sec? Does a sector need to be decrypted for instance in order to read the position of the next block of a file and would the extra time possibly mean the head reads past it or something? –  Jason Goemaat Jul 26 at 0:08
    
I suspect that during a sequential read operation, the data are read from the drive in their encrypted state into memory while the software decrypts the data in memory at the rate the processor allows. Reading data should not be blocked by the decryption process; otherwise, TrueCrypt would be very slow. –  DragonLord Jul 26 at 0:19

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