The multi-billion-dollar markets behind cryptocurrencies are in jeopardy after child abuse images were found in bitcoin’s blockchain.
German researchers have analysed more than 1600 files in the technology required to access the cryptocurrency and found 99 per cent are texts and images, including some illicit pornography and other outlawed content.
The blockchain is the underlying technology that makes cryptocurrencies possible.
It is essentially a public ledger of all the transactions ever made in the currency and keeps a record of which user owns what and stops the coins from being copied.
This is locked and cannot be changed.
However users can leave “non-financial data”, the analysis of which has found links and attachments that “contain content to be considered objectionable in many jurisdictions”.
“[For example], the depiction of nudity of a young woman or hundreds of links to child pornography,” the RWTH Aachen University and Goethe University researchers said.
Because the blockchain underpins the cryptocurrency, bitcoin users must maintain a complete local copy of the complete blockchain.
This “non-financial data”, too, cannot be changed.
“As a result, it could become illegal [or even already is today] to possess the blockchain, which is required to participate in bitcoin,” the researchers’ paper notes.
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 pornography can make the blockchain illegal to possess for all users.”
Interpol warned in 2015 that the blockchain could be embedded with malware or other illegal data, including child abuse images.
Researchers found the blockchain contains at least eight files with sexual content – five showing, describing, or linking to “mildly pornographic content” and three with content “objectionable for almost all jurisdictions”.
“Two of them are backups of link lists to child pornography, containing 274 links to websites, 142 of which refer to Tor hidden services,” the paper says.
The German research of legal jurisdictions around the world found the sexually explicit content found in the blockchain could affect the users in “at least 112 countries in which possessing content such as child pornography is illegal”.
“This especially endangers the multi-billion-dollar markets powering cryptocurrencies such as bitcoin,” the paper says.
Bitcoin blockchain could expose some to death
The study concluded there was “a wide range of objectionable content [that] can cause direct harm if possessed by users”.
Not all of them, for example religious content, are risks Australian bitcoin holders are exposed to.
“Certain symbols, prayers, or sacred texts can be objectionable in extremely religious countries that forbid other religions and under oppressive regimes that forbid religion in general,” the paper notes.
“As an example, possession of items associated with an objected religion, eg, Bibles in Islamist countries, or blasphemy have proven risky and were sometimes even punished by death.”
It is not clear whether this type of content was found in the researchers’ analysis.