Bitcoin’s price rose above $9,000 for the first time in a week on Tuesday evening, despite reports that its underlying blockchain contains hundreds of links to child pornography.
The reports, based on a paper published by German researchers, points to a potentially serious legal flaw with the blockchain concept.
Blockchains, which are transaction ledgers that are stored on many computers, are supposed to be immutable, in order to guarantee the integrity of the information they hold. They can theoretically be altered, but only if most of the network’s participants agree to use a new version or “fork” of the blockchain, rather than the original. This has never happened with Bitcoin.
However, some blockchains, such as that underpinning the Bitcoin ecosystem, can contain all sorts of fragments of information, some of which may be illegal in certain jurisdictions—and if you can’t delete that information, everyone with a copy of the ledger could end up in trouble with the law.
It was already known that blockchains could seriously clash with European data protection laws, which say people must be able to have their personal data deleted or amended, wherever it is stored—transactions and public cryptographic keys, which are regularly stored on blockchains, usually qualify as personal data.
The issue of child sexual abuse material is even more politically and legally sensitive. Nonetheless, the Bitcoin community doesn’t seem to be concerned about the potential impact of the latest news on the cryptocurrency’s ecosystem.
Bitcoin price has instead been rising on news that G20 finance ministers aren’t cracking down on cryptocurrencies just yet. The leaders said on Tuesday that they will only propose harmonized global regulations in July, after collecting more information.
At the time of writing at 6 a.m. Eastern Time on Wednesday morning, Bitcoin’s price stood at $9,097. It fell below the $9,000 mark a week ago, after Google followed Facebook in banning cryptocurrency-related ads from its platform. Twitter is reportedly planning to do the same, amid concerns that people are being enticed by scammers offering “initial coin offerings” (ICOs) that have no real business behind them.
