Some media outlets are having a field day claiming that Bitcoin will not just need to become illegal in nearly every jurisdiction across the planet, but that it already is illegal. They claim that anyone who has ever downloaded the full blockchain of Bitcoin could be prosecuted under international laws for having possession of and distributing data pertaining to the abuse of a minor. Admittedly, they don’t word it so accurately.

These headlines are sensational and misleading.

Cryptocurrency fear, uncertainty and doubt, they are quickly learning, brings in clicks and also viewership due to the masses of fresh and unexposed newcomers entering the cryptosphere. They haven’t seen the FUD cycle roll on, so they are a media advertising bonanza. Viewers will click on anything they think will give them some important information to help predict a market, especially if they think their investment is “ïn jeopardy”.

The result are headlines like below. They are exaggerated, hyperbolic, and full of misinformation.

The above article is from an Australian based online news site. This article opens with the poignant paragraph…

The juggernaut that is Bitcoin has been rocked by a child porn scandal, after illicit content was found in its blockchain. Researchers in Germany sifted through more than 1000 files in the ledger system that provides the backbone for Bitcoin, and discovered 99 per cent of them contained hundreds of links to child pornography, among other outlawed content.

Let’s look at those astonishing figures. 1000+ files, 99% of which contain hundreds of child pornography links. You’d be shocked!

Keep these figures in mind when we look at a more measured article by Cointelegraph. Let’s take a look at the story from a less hyperbolic, headline grabbing mentality.

Bitcoin’s design includes several methods to insert arbitrary, non-financial data into its blockchain in both intended and unintended ways. Augmenting transactions with short pieces of arbitrary data is beneficial for a wide array of applications. These range from superficial in value to the utmost importance to our very freedom. They include: to attest the existence of digital documents at a certain point of time as a digital notary service, to realize distributed digital rights management, adding identifiable voting flags to transactions enables miners to vote on proposed features, the archiving of historical data or censorship-resistant publication which helps protect whistleblowers or critical journalists.

There are also many risks associated with this open public ledger concept. These range from: copyright violations, malware, privacy violations, politically sensitive content, and the highly relevant matter of illegal and condemned content.

A joint study titled “A Quantitative Analysis of the Impact of Arbitrary Blockchain Content on Bitcoin” conducted by Germany’s Goethe and Aachen Universities found a total of eight files containing sexual content, 5 of which were mild in nature.  The remaining 3 are said to be “Objectionable for almost all jurisdictions”.

According to the Cointelegraph article they are dead links. They no longer provide access to any illegal material.

Could the vast number of people that have downloaded the blockchain really be prosecuted? The simple logistics of rounding up and prosecuting 10,000 node owners, seems a bit disproportionate given that it is highly unlikely the node operators would have the required technical capability or the resources to access this data due to the high difficulty in decoding it.

Cointelegraph, covering the story with common sense, reported that they had asked cryptography consultant and former Bitcoin Core developer, Peter Todd, if users can access the data.

You need special decoding tools to be able to extract the data and make sense of it.

Todd pointed out to Cointelegraph that Bitcoin was not originally designed to publish data and it is therefore “expensive to do so, which invariably acts as a natural deterrent factor for people not to publish data”.

As we know, the blockchain is an immutable ledger of transactions and accompanying data. There is no real option to remove informational or transaction data that is already there. That’s the entire point of an immutable blockchain.

When asked if it was possible to remove the data, Todd stated it would equate to

demolishing part of a house because someone threw a vial of crack into an expansion joint crack that leads to an inaccessible space within the building.

There are options for going forward. The paper even makes a recommendation “We thus believe that future blockchain designs must proactively cope with objectionable content. Peers can, e.g., filter incoming transactions or revert content holding transactions [11,51], but this must be scalable and transparent.”

For Bitcoin the only real option would be increasing the cost of transaction fees for non transaction data uploads to the blockchain, but this could be considered unnecessary due to the already high costs of publishing data onto the Bitcoin blockchain. Any substantial data (such as an images as opposed to a url) was most likely placed on the blockchain at a time when Bitcoin was a lot cheaper to burn. It would also make it harder for people who have a legitimate and socially crucial use for this function.

Unfortunately, there may be some instances where governments do decide to pursue node operators, or to use this as an excuse to act against node operators as an attack on Bitcoin.

Considering the recent positive sounding rhetoric that came from last week’s meeting of G20 Finance ministers ahead of this year’s summit to be held in July, it seems that any major action being taken on node holders for this issue would likely come from outside the G20.

A lot of media are beating up on crypto because they know people keep watching when they do. Any honest reporting of this would see actual experts interviewed and some genuine inquiries as to what solutions there may be to the problem.

In reality, I suspect that this issue will be a distant memory within as little as 48 hours and hopefully that will be the last we hear of it.


Featured Photo by Markus Spiske on Unsplash


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