Blockchain has been referred to as many things, with specific emphasis on the fact that it's much more secure than other methods of data storage because it's basically impossible to hack the entire chain. Unfortunately that extra security makes it more appealing to criminals, who are ready to exploit it for their own ends. And they have, because German researchers found that someone has hidden child abuse images inside Bitcoin's blockchain.
The Bitcoin blockhain is open source, and designed to act as a ledger for all the cryptocurrency's financial transactions. But it can be used to store other information in small quantities, including links and files, which is where the imagery in question came from. Researchers at RWTH Aachen University in Germany found that Bitcoin's blockchain currently holds around 1,600 files, eight of which were sexual. Of those eight one image was thought to have involved children and another two contained 274 links to child abuse content. 142 of those links also happened to be for services on the dark web.
The researchers noted that this could pose a threat to blockchain services as a whole, based on current legislation, saying:
Although controlled channels to insert nonfinancial data at small rates opens up a field of new applications such as digital notary services, rights management, or non-equivocation systems, objectionable or even illegal content has the potential to jeopardize a whole cryptocurrency. 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.
As of now, this can affect 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.
Blockchain isn't necessary for users wishing to trade Bitcoin, some processes, like mining, do require users to download either the full blockchain or parts of it - illegal material and all. Naturally that causes a lot of problems, with the researchers noting that even a single instance of illegal material could automatically make it illegal to use blockchain-based systems. Bitcoin and other cryptocurrencies have come under intense scrutiny over the past few months, and this revelation isn't likely to help matters - especially from a regulatory perspective. That probably won't do the still-fluctuating price any good either.
As The Guardian points out this wouldn't be the first time people have been warned about the potential to store non-financial data within a cryptocurrency's blockchain. Back in 2015 Interpol warned about nefarious people who might want to store malware within the blockchain, noting there currently weren't any methods that would effectively wipe the data. It too warned that blockchain technology could be exploited to host and share child sexual abuse content.
But now these researchers have shown those warning were not unfounded, and where things will go from here is anyone's guess.