Bitcoin is once again in jeopardy after German researchers recently discovered that unknown persons have been using the cryptocurrency’s blockchain to store and link to child abuse imagery. Out if the 1,600 files that the researchers analyzed, 99 percent were text and images that included illicit pornography, child abuse imagery as well as other illegal content.
The blockchain is the underlying technology that powers the existence and operation of any cryptocurrency and though they are separate entities, no cryptocurrency can work without the blockchain. At least not yet. The blockchain is essentially a public ledger of all the transactions ever made in the decentralized digital currencies and keeps records of which users own what and stops the currency from being copied. This framework is locked and cannot be altered.
The Implications of These Findings
Blockchains are not limited to cryptocurrencies alone and thus they can be used to hold other types of non-financial data as well. This non-financial data was the point of focus for researchers from the RWTH Aachen University in Germany. The results of the analysis revealed a number of links to dark web services and attachments containing content that was “considered objectionable in many jurisdictions”.
“Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal,” the German 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.”
This is, however, not the first time that warnings about the possibility and dangers of storing non-financial, and possibly illegal, data within the blockchain have been issued. In 2015, for instance, Interpol set out a warning that stated 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 definitively confirmed that blockchain technology had flaws that could enable the sharing of illicit content such as child abuse images.
“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 system as soon as it contains illegal content,” the RWTH Aachen University researchers added.
While this might be dismissed easily since spending bitcoin does not necessarily require a copy of the blockchain (this is, after all, the goal), many other core processes such as mining require users to download a full blockchain copy or at least have chunks of it. In addition to the fears that anti-bitcoin ambassadors are propagating, the findings by the researchers put the booming, but fragile, multi-billion dollar cryptocurrency market’s reputation into the gutters. Still, it is definitely not too late to fix this.