The limits

Every full node checks every transaction, and blocks come at a set pace: about every ten minutes on Bitcoin, and in 12-second slots on Ethereum. NIST notes that transactions on many open networks are slower than on ordinary computer systems for this reason.

Each transaction pays a fee. A new full node has to download the whole history: NIST noted Bitcoin's was over 175 gigabytes when it wrote in 2018.

Proof of work uses a lot of electricity by design: that is what makes the record costly to rewrite. Proof of stake, and networks run by a known group, need no such puzzle.

ethereum.org's energy page compares the two. It lists Bitcoin at 149 TWh of electricity a year, citing the Cambridge Bitcoin Electricity Consumption Index. Citing a study by CCRI, it says the Merge cut Ethereum's electricity use by more than 99.988%, to about 0.0026 TWh a year.

Data on a blockchain can be added and read, but not edited or deleted. A mistake stays. A correction is a new record that points to the old one, and the old one is still there, even if an app stops showing it.

This matters for personal data. NIST notes that data protection rules, such as the GDPR, may mean some information should not be put on a blockchain at all.

Blockchains are often called immutable. NIST says that is not strictly true: they are tamper evident and tamper resistant. The newest blocks can be replaced when the network splits for a moment.

Someone who controls more than half of the computing power, or of the stake, could rewrite recent history. This is a 51% attack. It is not technically hard, only expensive, and the further back the change, the more it costs. On a permissioned network, the owners can replace blocks if they choose.

A blockchain cannot check that what is put on it is true. A sensor can be faulty, and a person can type something false. If a payment is for a real-world item, the blockchain cannot tell whether the item was delivered.

Services that feed outside information to smart contracts are called oracles. A contract can only be as right as the information its oracle gives it.

Blockchains are sometimes called “trustless”. NIST calls that a misreading. Users still trust the cryptography, the developers of the software, the code of any smart contract, and that most block publishers are not secretly working together.

A blockchain also does not know who anyone is. It links transactions to keys, not to people.

Whoever holds a private key controls what it holds. Lose the key and that is lost; if it is stolen, a transfer the thief makes generally cannot be undone. See keys and signatures.