German researchers have discovered that criminals have embedded objectionable content including links to child abuse images within the Bitcoin blockchain.

Researchers from RWTH Aachen University said that the issue lay with how the blockchain - the indelible distributed ledger that records all Bitcoin transactions - can also record other arbitrary data.

In their paper presented at a conference in Curacao, the team wrote: "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 (child sexual exploitation images) can make the blockchain illegal to possess for all users."

The discovery potentially means that possession of the blockchain - which is necessary to participate in Bitcoin - could be illegal in at least 112 countries.

More than 90% of the arbitrary data stored in the blockchain is of short messages and pictures, researchers found, and other possible objectionable content includes malware and viruses.


Of the 1,600 files analysed, the team discovered "at least eight files with sexual content" - two of which were backups of link lists to images of child sexual exploitation.

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Carney: Cryptocurrencies must be regulated

The research follows a warning from Interpol in 2015. It is not limited to the Bitcoin blockchain but affects those of other ledgers which allow additional data to be stored, including Ethereum.

Earlier this month, Mark Carney, the governor of the Bank of England, warned Sky News that cryptocurrencies faced a regulatory crackdown, stating that the time had come to "regulate elements of the crypto-asset ecosystem to combat illicit activities".

Mr Carney said: "There are a number of problems with cryptocurrencies. They are small now but they are getting bigger."