Some of Bitcoin's most important features -- the immutability and the distributed nature of its blockchain -- might spell trouble for the cryptocurrency.

A German team of researchers have found some objectionable content within Bitcoin's blockchain, including links to child pornography and, possibly, at least one such image. Since the totality of Bitcoin's blockchain has to be downloaded in order to mine Bitcoin or run a full Bitcoin node -- a program that validates transactions on the network -- that means anyone who does so is in possession of potentially illegal content.

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In the vast majority of cases, the data on Bitcoin's blockchain consists of a list of transactions on the network. But it is definitely possible to store data in the blockchain; in fact, the very first mined block in Bitcoin's blockchain contains a text message, left there by its creator Satoshi Nakamoto. Now, it appears that some nefarious individuals have used this property of the blockchain to insert potentially illegal content.

In a paper called " A Quantitative Analysis of the Impact of Arbitrary Blockchain Content on Bitcoin," first reported by The Guardian, a team of researchers from the RWTH Aachen University in Germany lay out an analysis of roughly 1,600 files which exist on Bitcoin's blockchain. Most of this content is "harmless," the paper says, but there is at least one file that depicts "nudity of a young woman" and "hundreds of links to child pornography."

"It could become illegal (or even already is today) to possess the blockchain."

"As a result, it could become illegal (or even already is today) to possess the blockchain, which is required to participate in Bitcoin. Hence, objectionable content can jeopardize the currently popular multi-billion dollar blockchain systems," the paper claims.

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The paper lists several other types of content that could be problematic if found on the blockchain: data that violates copyright, someone's privacy, politically sensitive content or just plain old malware.

The problem with this is Bitcoin's immutability -- you simply cannot remove a block from the blockchain. Imagine laying single bricks on top of one another -- brick after brick after brick. Take one out and the entire thing crumbles. This is good for financial transactions, as it makes it impossible to double-spend your money, but it's problematic when you have an illegal image or link in there. And yes, there's a lot of illegal content on the internet, but you're not actually required to have any of it on your computer to use the internet.

For the ordinary user, this is no big deal; one can easily store their Bitcoin in a so-called light wallet, which does not require downloading the entire blockchain on one's computer. But if a judge says it's illegal to own the blockchain, it's going to affect miners and people running full nodes, and Bitcoin cannot operate without them (note that it's possible to mine Bitcoin without storing the blockchain, for example if you're mining through a mining pool. But the pool itself does have to store the entire blockchain in order to operate).

One could argue -- and perhaps defend this stance before a judge -- that merely mining Bitcoin or running a full node does not necessarily mean you'll use data hidden in the blockchain for nefarious purposes. But it's still worrisome that legitimate uses of Bitcoin in some cases require downloading and storing potential illegal content on your computer.

Right now, Bitcoin's immutability is a non-negotiable feature; it's just not possible to erase or alter any part of the blockchain after it's been mined. It's possible (though far-fetched) that Bitcoin will change this in the future. Methods that could mitigate the issue include, for example, the exclusion of certain types of data on the blockchain for running full nodes or mining, or encrypting the blockchain (or parts of it), but these would require a very significant change in how it operates, potentially undermining some of its biggest advantages.

This issue has been raised before. Former Bitcoin core developer Jeff Garzik discussed it in a blog post in April 2013, calling it an "awful situation" that's "difficult to address." And in March 2015, Interpol warned that Bitcoin's blockchain could be used for storing virtually un-deletable malware or child abuse images. To my knowledge, no viable solution for the issue has been proposed so far.

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.

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TopicsBitcoin