One of the big buzzwords in technology these days is “the cloud.” With Apple pushing out iCloud to all of its iOS device users with the advent of iOS 5, and Google working on an entirely cloud-based operating system in the form of its Chrome OS, it’s clear that the cloud is going to be dominating a lot of the innovations that will be coming out of Silicon Valley in the next few years. Unfortunately, most people I’ve talked to seem to view the cloud as a mythical place that does everything they could possibly want. While it’s entirely possible that’s the case, in general the cloud has its limitations and hazards.

The very idea of the cloud is that all of your data is stored in one place, somewhere on the Internet. It’s really quite an amorphous idea that belies the fact that your data is not stored in some fluffy white bunch of packets but rather on some sort of storage medium (probably a hard drive) in a large server farm owned or perhaps rented out by the company whose services you’re using. In other words, while many people will talk about things being “in the cloud,” they are, in fact, on a computer.

This actually brings you a number of benefits as a consumer: Because you’re storing your data (like your contacts and calendars on iCloud) in a server farm, it means that there are people whose sole job is to pay attention to the drives your data is being stored on and keep them running. In other words, because it’s in Apple’s interest to keep iCloud working properly, there’s a fairly good chance your data will be kept safe and accessible.

It’s also really convenient: Anywhere you have an internet connection, you can access data that you’ve stored with one company or another. When I add a new contact to my iPhone, I’ll have that same contact waiting for me in my laptop’s address book once I’ve synced both devices with iCloud. There are other services like Dropbox that allow you to back up gigabytes of data from your computer’s hard drive that can then be accessed anywhere. If you’re on the go, or need to get a huge file from point A to point B, services like those are really useful.

That’s not to say the cloud isn’t without its pitfalls: you’re entrusting your data to a third party, after all. The first question is what happens when a company goes out of business. If everything you ever need is on a set of servers that are shut down after a company goes into bankruptcy, you’re up a creek without a paddle. So, I’d always recommend having on-site copies of whatever it is you’re syncing to the cloud. With iCloud, that’s not really an issue because everything is already saved both in your device’s memory and on your computer, but only accessing your documents from a remote folder could put you in the lurch if something should happen. You don’t want to be the person who says, “The datacenter ate my homework.”

Then there’s the issue of legal proceedings. While you will have knowledge and control over what happens to data that’s stored on your computer, it’s not unheard of for government agencies to subpoena cloud service providers to get access to their users’ data. If that’s something you’re concerned about, I’d shy away from the cloud.

The cloud is here to stay, that’s for certain. But before you go jumping in with both feet, look before you leap.