Definition ∞ Computational efficiency refers to the optimal use of computing resources, such as processing power, memory, and time, to perform a task. In digital systems, it quantifies how effectively an algorithm or protocol processes data with minimal resource expenditure. High efficiency means operations are completed quickly and with reduced energy consumption. This aspect is crucial for the performance and scalability of any technology.
Context ∞ In blockchain and cryptocurrency discussions, computational efficiency is a key factor in protocol design, particularly for consensus mechanisms and transaction processing. Solutions like sharding or layer-2 scaling protocols aim to significantly improve network efficiency to handle higher transaction volumes. News reports often highlight advancements or limitations in a blockchain’s efficiency, directly impacting its viability and adoption.
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