The word Cloud is used as a metaphor for the internet, based on standardised use of a cloud like shape to denote a network. Cloud Computing is advanced technology for resource sharing through network with less cost as compare to other technologies. Cloud infrastructure supports various models IAAS, SAAS, PAAS. The term virtualization in cloud computing is very useful today. With the help of virtualization, more than one operating system is supported with all resources on single H/W. We can also say that we acquired single server but we used it for multiple functions(Web Server, database server, Application Server, DNS Server, DHCP Server). One more asset of cloud computing is Multi Tenancy. Sharing of one database to many tenants or we can say users is known as multi tenancy. Cloud computing customize the requirements of user and u r able to pay as per use. Network applications share through multi tenancy for various users but security of data is basic issue. This paper discusses about the security with more encryption routines and upgrades performance with network route optimization.Due to increase in performance and security, more number of people attract towards CLOUD COMPUTING. Virtualization is a term of cloud computing. Virtualization is a very new technology in computer technologies. With the help of virtualization share the resources software and hardware. Best example of virtualization is THIN CLIENT technology, which runs more than one client with one server. Desktop virtualization shares the desktop with other thin client. Security and Performance issues link with desktop virtualization also. HP + Microsoft launch one server (H/W provided by HP and S/W provided by Microsoft Multipoint Server edition).