German researchers have discovered unknown persons are using Bitcoin’s blockchain to store and link to child abuse imagery, potentially putting the cryptocurrency in jeopardy.
The blockchain is the open-source, distributed ledger that records every Bitcoin transaction, but can also store small bits of non-financial data. This data is typically notes about the trade of Bitcoin, recording what it was for or other metadata. But it can also be used to store links and files.
Researchers from the RWTH Aachen University, Germany found that around 1,600 files were currently stored in Bitcoin’s blockchain. Of the files least eight were of sexual content, including one thought to be an image of child abuse and two that contain 274 links to child abuse content, 142 of which link to dark web services.
“Our analysis shows that certain content, eg, illegal pornography, can render the mere possession of a blockchain illegal,” the researchers wrote. “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 especially endangers the multi-billion dollar markets powering cryptocurrencies such as Bitcoin.”
While the spending of Bitcoin does not necessarily require a copy of the blockchain to facilitate, some processes, such as some mining techniques, require the downloading of the full blockchain or chunks of it.
“Since all blockchain data is downloaded and persistently stored by users, they are liable for any objectionable content added to the blockchain by others. Consequently, it would be illegal to participate in a blockchain-based systems as soon as it contains illegal content,” the researchers wrote.
Since mining is essential for the function of Bitcoin, as the process records the transactions into the blockchain to verify trades and generates new Bitcoin in the process, having illegal content such as child abuse imagery within the blockchain could cause significant issues for the currency.
“We anticipate a high potential for illegal blockchain content to jeopardise blockchain-based systems such as Bitcoin in the future,” the researchers wrote.
This is not the first time warnings over the ability to store non-financial data within the blockchain have been issued. Interpol sent out an alert in 2015 saying that “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”.
The agency warned that the technology could be used in the “sharing of child sexual abuse images where the blockchain could become a safe haven for hosting such data”.
But this is the first time such content has been shown to actually exist, creating a moral and legal quandary around possession and the blockchain.