Bitcoin: Child sexual abuse images found embedded within cryptocurrency's blockchain

Researchers have discovered images of child sexual abuse buried within the bitcoin blockchain.

Although cryptocurrencies like bitcoin are currently unregulated, possession of such images are a criminal offence in most territories - meaning that virtual coin traders in 112 countries could potentially be implicated in breaking the law, however unknowingly, simply by using blockchain as is required to carry out bitcoin transactions or mining activities.

For the uninitiated, the blockchain is an open source, decentralised public ledger that records all bitcoin trades anonymously.

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The discovery of disturbing imagery among the abstract data also collated within the blockchain was made by academics studying the emerging cryptocurrency sector at the RWTH Aachen University in North Rhine-Westphalia, Germany.

"Although controlled channels to insert non-financial 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 jeopardise a whole cryptocurrency," the researchers warned at a conference in Curacao.

"Although court rulings do not yet exist, legislative texts from countries such as Germany, the UK or the US suggest that illegal content such as this 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."

The Aachen University academics said they had uncovered eight indecent images in total - one of which involved a child - among the 1,600 files they analysed.

A further 274 contained links to child abuse content, 142 of which were on the dark web.

Viruses and malware were also found among the digital detritus accumulated by the blockchain, but 90 per cent of its data consisted of harmless short messages and pictures files.

Interpol and Kaspersky Lab did warn that blockchain technology could potentially be open to misuse in March 2015, saying there was a possibility illegal or inappropriate data could be "injected and permanently hosted" with no means of wiping it, creating a "safe haven" for cyber-criminals.

Interpol stressed the problem was not limited to bitcoin but could affect other varieties of digicoin too like ether, ripple and litecoin.

The cryptocurrency sector is under increasing scrutiny at present, with the threat of regulation looming and a number of tech giants, including Twitter, Google and Facebook, announcing that they will ban all virtual currency advertising for initial coin offerings, wallets and exchanges to protect consumers from scams.