> Is the slowdown that results from SSH caused by 1) an increase in the amount
> of data sent between the two endpoints of the secure tunnel or is the
> slowdown caused by 2) just the additional computation necessary to encrypt
> and decrypt the data stream?

Rather than ask the question like that, spin it around.

Given a fixed bandwidth connection, is it possible that some protocol
will not fit through the connection?  The answer is always yes.

As protocol overhead approaches channel bandwidth, what happens?  
The answer varies quite strongly on the combination of prototcols.

Recall that for a dial-up connection, you are typically running IP on
the raw layer, TCP on that, PPP on that, then perhaps a VPN on that,
perhaps with SSL on that, then VNC on top, and finally the user is doing
something.

One keystroke or mouse movement results in a cascade of ever-expanding
encapsulations.  Think about running in 300 baud.  Could the SSL ever
get a complete ACK within its timer if there were a few dozen retries
at the TCP level?  No, not in any reasonable time.

If all the protocols are stateless, response time can go to infinity,
and everthing is still correct.  For example, try runnig NFS over PPP
on a noisy, slow line -- write speed of 1 byte per minute is perfectly
valid.

One "wild" idea I have is to run VNC on UDP (like FTP and NFS) instead
of on TCP.  Yes, this would be a major, perhaps impossible, change.
For low bandwidth connections, it would be winner.
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