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The data field can be used to send arbitrary data in a transaction. I am aware that the amount of gas required increases with the increase in size of data, but, is there a limit to the size that's allowed? According to this post, the transaction size is limited by the block gas limit in Ethereum. But, what if I'm running a private blockchain with no block gas limits (Is this possible?). Does it mean that I can transfer any amount of data between accounts and all of this gets stored in the private blockchain forever?

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In genesis.json you can set the block gas limit and then see How can I stop the block gas limit on a private chain dropping to the public chain default?

Does it mean that I can transfer any amount of data between accounts and all of this gets stored in the private blockchain forever?

Yes.

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