Besides their seemingly enormous potential for profit by everyday investors, cryptocurrencies and blockchain networks also have a seedier appeal as well. The anonymity provided by decentralized networks has enticed criminals of various sorts; some currencies and exchanges have been plagued by hacks and other nefarious activity. Now, a report by Cointelegraph suggests that a study from Germany's Goethe and Aachen Universities has unearthed eight files that show or link to sexual content, hidden within the blockchain for bitcoin, the world's largest cryptocurrency. There have been allegations that some of these image might link to child pornography, but Bitcoin Core developer Peter Todd told Cointelegraph that any links to child porn sites were found to be dead links.

Question of Ownership and Responsibility

Because of the decentralized nature of bitcoin and the structure of the blockchain which undergirds it, determining ownership and responsibility for the illegal content is difficult, at best. Ultimately, the report suggests, "any user that has a bitcoin full node is in possession of data that could potentially lead to criminal prosecution." A number of media outlets have moved quickly to criticize the broader blockchain community for this content. Nonetheless, Coin Telegraph suggests that there are important technical considerations regarding the structure of the blockchain to keep in mind.

Can Content Be Removed?

Todd commented on questions of ownership of the material and next steps. He suggested that the risk of the average user accessing the particular material in question is small, suggesting that "you need special decoding tools to be able to extract the data and make sense of it."

Todd also acknowledges that the bitcoin protocol was not built to publish data. As he told Cointelegraph: "The tools in question make use of the unavoidable fact that any publicly auditable ledger that the public can interact with can also be leveraged to publish data. This is an unavoidable fact of life, because the entire purpose of being publicly auditable is to distribute data so the public can verify it."

Todd continues by suggesting that adding a prohibitive cost for publishing data could be a deterrent to this type of content in the future. However, because of the immutability of the transactions on the blockchain, meaning that transactions which have been verified cannot be changed, the content cannot be removed. However, the illicit links are dead and they are effectively blocked to the public by deep levels of encryption. Regardless, this particular case may have a significant impact on future developments in the blockchain space, as new networks make efforts to neutralize this issue.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.

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