It may soon be illegal to own Bitcoin because of illegal images and links housed inside the blockchain. First reported by the Guardian, Researchers at Aachen University in Germany discovered links to child abuse and at least one photograph of child pornography stored within individual blocks.
Blockchain is a distributed database that uses cryptography to secure individual transactions. While each block contains metadata about a transaction and the history of the block before it, they can also house small bits of information. Typically, these notes only contain details about a transaction, like what it was for. However, they can also be used to store small files and images.
Of the 1,600 blocks the researchers identified as containing files, 99 percent housed either text or images. A small number of those, at least eight, contained sexual content, including one believed to be an image of child pornography and two containing 274 links to child abuse content, 142 of which linked to the dark web.
Bitcoin owners may be held accountable since everyone who mines the smallest slice of the digital coin is required to download the full blockchain—and therefore, encoded messages that link to child porn.
“Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal,” the researchers wrote in a report. “Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK, or the USA suggest that illegal content such as [child abuse imagery] can make the blockchain illegal to possess for all users.”
This isn’t the first time the blockchain was used to store illegal content. In 2013, links encoded in the Bitcoin ledger led to porn sites, some featuring children, according to a CNN report. Two years later, Interpol sent out a warning that blockchain could be used to spread malicious software, “the design of the blockchain means there is the possibility of malware being injected and permanently hosted with no methods currently available to wipe this data.”
But these latest findings differ from previous incidents in one crucial way: the discovery of images. Since federal statutes only prohibit the knowing viewing or distribution of child porn material, Bitcoin owners would likely be protected from encoded links. However, that may not be the case for images. As the researchers point out, countries like the U.S., England, and Ireland, deem data illegal if it can be converted into a “visual representation of illegal content.”
In Germany, people are at fault if they knowingly possess illegal content on an accessible document. Since Germany considers the hard drive containing the blockchain a document, Bitcoin owners would be held accountable if media coverage makes the blockchain’s illegal contents public knowledge.
“Since all blockchain data is downloaded and persistently stored by users, they are liable for any objectionable content added to the blockchain by others,” the university researchers explained. “Consequently, it would be illegal to participate in a blockchain-based system as soon as it contains illegal content.”
But not everyone believes the mere existence of child pornography hidden deep within the blockchain warrants government regulation. Kai Sedgwick at Bitcoin.com claims the fear about child pornography appearing in the blockchain is “fake news” since the illegal content represents a tiny portion of the blockchain and is difficult to access.
“To assert that the bitcoin blockchain contains child pornography is disingenuous, and is no more meaningful than saying that the internet contains CP [child pornography],” he wrote.
Because this is the first time images of child pornography were found in the blockchain, it’s still not clear what actions, if any, regulators will take against systems enabled by blockchain technology. However, the researchers who discovered the content believe it has the potential to send the crypto market crashing down.
“While this risk has previously been acknowledged, definitive answers require court rulings yet to come,” the researchers wrote. “However, considering legal texts we anticipate a high potential for illegal blockchain content to jeopardize blockchain-based system such as Bitcoin in the future.”
