Here’s Why Putting Porn in the Blockchain Won’t Kill the Technology

Last week the internet jumped on a new research paper proclaiming that the bitcoin blockchain contains child pornography. The authors of that paper conclude that if you’re one of the thousands of people running a full copy of the bitcoin software, or even just a curious researcher downloading the transaction history, you’re breaking the law. Because removing any data from the blockchain destroys the functionality of the system, this legal trouble could spell doom for cryptocurrencies.

What was missing from the conversation is a more nuanced understanding of how the law works. Blockchain technologies in their current form may run afoul of the most literal interpretation of the law, but neither the legal system nor the technology are that pedantic. Both sides can be more flexible than they first appear, and innocent blockchain users aren’t going to jail. Still, the debate raises meaty questions about how the blockchain might stack up against current U.S. law.

Blockchains are shared ledgers that record cryptocurrency transactions. Just as you can write anything you like on the back of a transaction receipt, blockchains allow you to write arbitrary data along with your transaction if you have the right software. It’s a feature, not a bug. Bitcoin users have long used this capability to insert data into the blockchain ranging from Valentine’s day messages and Rickrolls to controversial Wikileaks documents.

The authors of the current paper, which was presented at the recent Financial Cryptography conference, systematically scanned the bitcoin blockchain. They found 1,600 examples of non-transactional data, including a handful they considered objectionable or illegal. As a result, they conclude that every person who runs a full copy of the bitcoin software, known as a full node operator, is in possession of illegal material such as child pornography—a serious crime—whether they realize it or not.

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This isn’t the first apocalyptic claim about blockchains and the law. It won’t be the last. One standard story is that blockchains will make large swaths of criminal law, taxation, and financial regulation disappear by making all kinds of activities, including money laundering and leaking state secrets, impossible to prevent. The recent warning flips the script: It suggests blockchains will die under assault from law enforcement. Someone who sticks child pornography in a blockchain, according to this argument, contaminates the entire ledger with radioactive toxic waste, making it illegal for anyone else to touch.

The truth is otherwise. Blockchains won’t make the law go away, and the law won’t make blockchains go away. The reason is that both the law and blockchains are capable of adapting to a world with the other in it.

Start with the idea that if there is illegal material hidden somewhere in the blockchain, anyone in possession of a copy is a criminal. There’s a reason this sounds so harsh: It’s not the way the law actually works. Most crimes and regulatory strictures turn on your knowledge that you’ve done, or are doing, something wrong. A general awareness that there might be objectionable data on your computer is typically not enough; your knowledge has to be fairly specific. For example, copyright law has an exception—Section 512 of the Digital Millennium Copyright Act—for intermediaries who are just doing their jobs. Section 230 of the Communications Act provides similar protection for other kinds of content, which is why Twitter and Facebook weren’t shut down the moment one of their millions of users posted a defamatory statement, threatening hate speech, or nude pictures of children. From a legal perspective, users who run blockchain nodes perform functions similar to internet service providers or web hosts.

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