Researchers from Germany have found an unknown person using Bitcoin’s blockchain for storing and linking to child abuse images. This new finding puts the use of Bitcoin and other cryptocurrencies into jeopardy.
Since Bitcoin’s blockchain technology is open-source, the distributed ledger records all the transactions transparently. However, besides storing financial data, it also contains some non-financial data. In most cases, this non-financial data is related to trading activity. Sometimes, this data may contain metadata or can even be used to store files or links.
The Extent of Child Abuse Imagery Found on Bitcoin’s Blockchain
The researchers found that the non-financial data had around 1,600 files in it. Of all the 1600 files, eight of them contained sexual content. One of those images clearly pointed to child abuse. Two of them had links to 275 sources containing child abuse content. Around 142 of those links were pointing to web pages on the dark web.
The researchers revealed that their data analysis of certain content suggests having possession of blockchain-based cryptocurrencies could be considered illegal. They also argued that no court rulings exist in this regard. They reasoned that the legislative texts from the UK, the US, and Germany suggest such type of content to be illegal.
Therefore, they imply that Bitcoin’s blockchain becomes illegal because of the presence of such illegal content. They further note that such use of Bitcoin’s blockchain puts into question the entire multi-billion dollar industry of cryptocurrencies.
Does Spending Mean the Need to Download Entire Blockchain?
When one spends Bitcoins, they do not need to have a copy of the entire Bitcoin blockchain for facilitating such transactions. However, in some processes, for example mining, the miners have to download the entire blockchain.
Since many users are continuously downloading the data, they become liable for such objectionable content, even if its added by other users of Bitcoin’s blockchain. Thus, whenever a blockchain contains such illegal content, participating in such a blockchain-based system becomes illegal.
Implications of Illegal Content for the Future of Bitcoin’s Blockchain
The researchers’ findings was not something new. Back in 2015, Interpol sent an alert about the flawed design of blockchain technology that increased the possibility of injecting malware, which becomes permanently hosted without any way of wiping it out.
Interpol further stated that sharing of sexual abuse images of children would make blockchain technology a safe haven for such perpetrators. The new research proves that Interpol’s concerns are right.
We have already seen a warning from the Bank of England’s Governor suggesting it is time to regulate the different elements of the crypto asset ecosystem for combating illicit activities. Mark Carney also added that the current small number of problems with Bitcoin’s blockchain are only going to increase in the future.