The benefits and limitations

Now that we've looked at an overview of blockchain, we will be having a look at some of the benefits of blockchain. We will also have a look at some of the limitations when you are developing a blockchain application, and we will have a look at how we can overcome these limitations or how we can work around them.

Benefits of blockchain and Ethereum

The following are some of the benefits of blockchain:

• Decentralization
• Trustlessness—you don't have to trust or put all your money in a single point of failure
• It can be very cost effective
• It can also present itself to be the backbone of IoT and electric vehicles, a power grid, or a decentralized identity in your smartphone or an electric ID card

Limitations of blockchain and Ethereum

The following are some difficulties one can face while using blockchains:

• If you try to use blockchain where you don't need it, it can be very costly.
• Blockchains don't really do private data that well because blockchains are supposed to be public.
• Sometimes, centralization is required, and blockchains are always decentralized; that doesn't fit.
• Most blockchains don't really scale well to high usage.
• Storing big files is not really recommended because more computation means more power and more money on a public blockchain; on a private blockchain it just means more power—and you need to invest more in your infrastructure so that is also more money.

Overcoming limitations

Sometimes, you just can't overcome limitations because you just have to use blockchain where you need it. Some things can be overcome, such as storing private data on a public chain. This can be done by adding some extra encryption to your data. You can store big files on the IPFS which is also decentralized—it is not a blockchain, but it is decentralized file storage and it works really well with Ethereum. The problem of scalability is solved by Ethereum's sharding: sharding means splitting the space of accounts, such as contracts, into smaller subspaces. Private chains are also available if you need them, such as J.P. Morgan's Quorum, Monax, and Bletchley. They are all Ethereum based.