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Bitcoin's Blockchain Could Be Illegal in 112 countries

Researchers from the RWTH Aachen University and Goethe University, Germany, have uncovered images and links to child pornography in cryptocurrency Bitcoin’s blockchain. The analysis found that certain content, such as illegal pornography, would render the mere possession of a blockchain illegal, with data distributed to all Bitcoin participants.

While blockchain primarily is considered to enable credible accounting of digital activities such as money transfers in cryptocurrencies, it also records arbitrary data. Bitcoin transactions transfer funds between a payer (sender) and a payee (receiver), who are identified by public-private key pairs. Payers announce their transactions to the Bitcoin network. The miners then publish these transactions in new blocks using their computational power in exchange for a fee.

The researchers analysed the risks of arbitrary blockchain content, including copyright violations, malware, privacy violations, politically sensitive content and illegal condemned content. The analysis suggests: “Considering legal texts we anticipate a high potential for illegal blockchain content to jeopardize blockchain-based system such as Bitcoin in the future. Our belief stems from the fact that, child pornography as an extreme case of illegal content, legal texts from countries such as the USA, England, Ireland deem all data illegal that can be converted into a visual representation of illegal content.

“Since all Bitcoin participants maintain a complete local copy of the blockchain (e.g. to ensure correctness of blockchain updates and to bootstrap new users), these desired and vital features put all users at risk when objectionable content is irrevocably stored on the blockchain. This risk potential is exemplified by the (mis)use of Bitcoin’s blockchain as an anonymous and irrevocable content store.”

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