The blockchain is a wonderful, novel thing. But in order to know when a blockchain is the tool to fix a problem, it is important to understand what the blockchain does well.
Advantages of the Ethereum blockchain
- The data written on the blockchain cannot be changed. It can be updated, but the previous versions are still kept. In addition the details of the transaction (sender, receiver approximate time) are always recorded.
- What is stored on the blockchain is safe. No one has ever stolen from a blockchain wallet, without having the passwords. So protect those passwords. Ok, big proviso here. It is fair to say that data and Eth on the blockchain is not at all safe. Phishing scams are actively trying to steal your passwords and code written in Solidity is sometimes found to be flawed resulting in funds being lost or locked. The two multisig wallet incidents recorded here are good examples. But the underlying technology is secure and these weaknesses will be resolved as the technology matures
- The Ethereum Network is distributed amongst thousands of individual computers in a variety of countries. No individual, country or organization can control the blockchain
- Public: All transaction are view able by everyone. This is both up and down. Privacy is coming but if you want a fully private set of transactions, maybe Ethereum is not for you
Disadvantages of the Ethereum Blockchain
- While a major development goal for Ethereum is speed, it will always be slower than traditional computer processes. It’s distributed architecture drives this and I can’t see it changing
- Every transaction takes gas, because it is requiring work from a number of computers
- Internet based. There is no offline Ethereum. No network, no Ethereum
- Storage is very expensive. While there is no limit to the size of data that can be stored on the blockchain, the price of writing the data can be exorbitant. It is not practical for large data. This is why Swarm and IPFS are used. Storage on these utilities is cost effective yet still distributed and immutable. All that is stored on the blockchain is a link and a hash guaranteeing it has not been changed.