Connect with us

Bitcoin

No, There Isn’t Child Porn on the Bitcoin Blockchain

Published

on

Anyone swiping through the tech news on their tablet this week may have been startled by an unsavory story. Child pornography (CP) is permanently encoded in the bitcoin blockchain accoriding to mainstream media reports, making anyone who downloads the blockchain guilty of accessing CP. Not only is this old news, but it’s fake news. Understanding why calls for taking a quick dip into bitcoin’s code.

Bitcoin’s Boogeyman Returns

No one can really recall what bitcoin was branded as first: a tool of terrorists, drug dealers, or child pornographers. All that can be said for certain is all three canards have been trotted out regularly over the years. Only last week in the U.S. Senate, Representative Brad Sherman expressed hope that a cryptocurrency panel would reconvene immediately after there had been a terrorist attack funded by crypto. But that was last week; this week it’s all about pornography of the worst kind. CP is the topic du jour thanks to a new research paper. Its abstract explains:

Blockchains…irrevocably record arbitrary data, ranging from short messages to pictures. This does not come without risk for users as each participant has to locally replicate the complete blockchain, particularly including potentially harmful content…Our analysis shows that certain content, e.g., illegal pornography, can render the mere possession of a blockchain illegal…our analysis reveals more than 1600 files on the blockchain, over 99% of which are texts or images. Among these files there is clearly objectionable content such as links to child pornography, which is distributed to all Bitcoin participants.

This all sounds pretty damning, and given some of the alarmist headlines the paper has generated, you would have thought the FBI van was speeding its way to every address known to operate a full bitcoin node. But that’s not quite how the real story goes.

No, There Isn’t Child Porn on the Bitcoin Blockchain
The Daily Dot cranks up the FUD.

Old News Is Old

The CP on the blockchain story isn’t news and it isn’t new either. In fact, it was first dragged up in 2013, and has been revived, six years on, purely because a new paper has given the claims an air of legitimacy. News outlets were quick to jump on the story again, which was then widely shared by attention trolls such as Brianna Wu. The false hypothesis comes from the fact that it’s possible to encode information in the blockchain. That was how Satoshi famously hid his message in the genesis block: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”. Anyone inspecting the blockchain won’t find those words however. Instead they’ll find the following hash: 000000000019d6689c085ae165831e934ff763ae46a2a6c172b3f1b60a8ce26. That is the block’s coinbase parameter (nothing to do with Coinbase the company), written in hex.

No, There Isn’t Child Porn on the Bitcoin Blockchain
Media publications have had a field day with the CP non-story.

research paper published in July 2017 titled Data Insertion in Bitcoin’s Blockchain explores this topic in more detail and explains how the coinbase data “is arbitrary and can be up to 100 bytes in size”. Only miners have the ability to insert data in this manner, and it’s typically used to signal mining support for proposed protocol changes. There are five other ways in which data can be encoded on the bitcoin blockchain, and it is the OP_RETURN option that is at the center of the child pornography story. The 2017 research paper explains that “this method is appropriate for inserting small amounts of data (or transaction metadata), but it is not suitable for large quantities of data.”

No, There Isn’t Child Porn on the Bitcoin Blockchain
The Guardian gets in on the act

80 bytes is all that OP_RETURN can store, and what’s more that information is subject to deletion. That’s because bitcoin nodes are capable of pruning “provably unspendable” UTXOs for efficiency, which include OP_RETURN data. Anyone wishing to use the bitcoin blockchain to seek out child pornography would need to perform the following convoluted process:

  1. Download the entire bitcoin blockchain and sift through 251 million transactions to find the 1.4% that contain some kind of arbitrary data encoded in them.
  2. Ensure that the version of the blockchain you were using had been subject to no pruning that might have removed OP_RETURN data.
  3. Extract any web links that might be concealed in the data using some sort of steganography.
  4. Type the links into your browser until you eventually found a website that was still accessible.

To assert that the bitcoin blockchain contains child pornography is disingenuous, and is no more meaningful than saying that the internet contains CP. You could live to 100 and never encounter CP on the web, because that’s not how the web works. And that’s not how the blockchain works either.

Don’t Believe the Headlines

No, There Isn’t Child Porn on the Bitcoin BlockchainAsserting that there is child pornography on the blockchain would be like strolling through the U.S. Capitol Building, dropping a scrap of paper containing a deep web address, and then claiming that the American government is storing obscene content. As respected bitcoin commenter Nic Carter wrote: “Any journalist writing about arbitrary content injection into the Bitcoin blockchain should be extremely careful to detail to what extent that content exists, is extractable, viewable, etc. A text string which is a URL link to a [website displaying a thing] is not [the thing itself]. That is an extremely bad interpretation. Do not conflate the two. If you are willing to claim that “the blockchain contains X” you should be able to prove that you can extract X.”

Steganography and blockchain data insertion are fascinating topics that deserve scrutiny and further study. But to assert that the blockchain contains child pornography is misleading to the point of falsehood. It’s possible to encode a hidden link inside any database, including Facebook, Twitter, and Wikipedia. The act of doing so proves nothing other than the fascination some people have for concealing messages in messages – and that’s been happening since 1499.

Bitcoin

LibertyX Surpasses 1,000 Bitcoin ATMs Across the US

Published

on

LibertyX, the company that launched the first U.S. bitcoin ATM, will expand into 90 retail locations in Arizona and Nevada, according to a statement made Wednesday.

With this move LibertyX now operates more than 1,000 so-called bitcoin ATMs across the country. The latest additions are set up in AMPM, ARCO and Chevron gas stations, as well as select Family Dollar stores.

A partnership with Desert ATM, a non-bank ATM service provider, will enable street-level access bitcoin through user’s debit cards. Chris Yim, CEO of LibertyX, said the convenience and simplicity of bitcoin ATMs removes some of the hurdles to onboarding consumers to cryptocurrencies.

Related: Bitcoin Bounce Capped by $10K Price Resistance

This is not the first milestone the company has passed. In 2014, the company launched the first crypto ATM in America in Boston’s South Station. In 2016, it hired the first bitcoin cashier. In 2019, it became the first to enable debit card transactions on traditional, non-bank ATMs, without a hardware upgrade.

“It was a natural evolution of what we started almost 5 years ago,” said Yim, speaking about the most recent advancement. “Our goal is to make bitcoin available on every block in America.”

While LibertyX offered in-person cashier services in the southwest before, this move is the first time the company is integrating with Genmega machines in Arizona and Nevada.

Genmega operates “approximately half” of the non-bank retail ATMs that would be compatible with the crypto-transaction enabling software upgrade LibertyX designed. “There are over 100,000 non-bank ATMs in the US and we hope consumers can buy LibertyX bitcoin from all of them,” Yim said.

Related: Sexual Misconduct Allegations Emerge Against Bitcoin Coder Peter Todd

Transaction limits are set at $3,000 worth of bitcoin per day, for customers that pass the KYC requirements.

In the past, Desert ATM had attempted to operate their own crypto machines, but found LibertyX had the experience to roll out the feature effectively, according to the company announcement.

“We’re thrilled with the demand and enthusiasm we’ve seen from ATM operators who have been dying for a scalable, compliant, and capital-efficient bitcoin solution,” said Yim, in a statement. “There are not many crypto companies still around from 2014 and we are proud not only to have survived, but thrived over the years. We have grown from that 1 ATM in Boston’s South Station in 2014 to thousands of retail locations nationwide today.

In June, bitcoin ATM competitor DigitalMint expanded to 20 locations in Arizona and Nevada.

Bitcoin ATM photo via CoinDesk archives

Related Stories

News Source

Continue Reading

Bitcoin

Short of Target: Bitcoin’s $1K Rally Still Leaves Bear Bias Intact

Published

on

View

  • Bitcoin’s short-term outlook will remain bearish as long as prices remain below $11,080 resistance. A break above that level would invalidate bearish lower-highs setup.
  • The bulls may have a tough time forcing a break above $11,080 amid news of BitMEX exchange facing a regulatory probe and talks of harsher crypto regulation.
  • Prices could drop below $10,000 in the next 24 hours with daily chart indicators continuing to report bearish bias.
  • A weekly close (Sunday, UTC) above $12,000 is needed to revive the bullish view.

Bitcoin (BTC) has rallied sharply in the last 24 hours, but the outlook remains bearish with prices holding below key resistance around $11,080.

The premier cryptocurrency jumped from $9,200 to $10,400 in just 40 minutes during the U.S. session yesterday, contradicting the case for a drop below $9,097 put forward by multiple rejections at $10,000 in the Asian trading hours.

Price rose further to $10,800 at 23:45 UTC, but closed at $10,648, leaving the crucial resistances of $10,759 (monthly opening price) and $10,850 (daily chart resistance) intact, as tweeted by popular analyst Josh Rager.

Rager wants to see BTC climb $10,850 before calling bullish revival. While that argument has merit, a much stronger confirmation of the bullish breakout would be a high volume move above $11,080.

That would invalidate the bearish lower highs pattern created during the sell-off from $13,200 to $9,049, as seen in the chart below.

Bearish lower highs

As of writing, BTC is changing hands at $10,330 on Bitstamp, having clocked highs above $10,770 at 08:00 UTC.

The cryptocurrency has come under pressure in the last hour or so amid news that the U.S. Commodity Futures Trading Commission (CFTC) is probing BitMEX, which offers trading of cryptocurrencies with up to 100-times leverage and products such as futures and swaps, over whether it allowed Americans to use its platform.

The latest CFTC probe could heighten regulation fears that have gripped markets over the last few days, making it difficult for BTC bulls to force a break above $11,070.

Technical charts are also calling a break below $10,000.

4-hour and daily charts

BTC is feeling the pull of gravity, having faced multiple rejections at the 50-candle MA on the 4-hour chart (above left) in the last 18 hours.

With bitcoin’s fall back to $10,300, the bearish crossover of the 50- and 200-candle MAs has gained credence.

Further, the relative strength index (RSI) on the daily chart continues to report bearish conditions with a below-50 print.

The Chaikin money flow index, which takes into account both prices and trading volumes, fell to 0.07 yesterday from 0.08, even though prices rose above $10,000. That divergence (marked by arrow) indicates the buying pressure weakened with the price rise and puts a question mark on the sustainability of the gains seen in the last 24 hours.

3-day chart

The 5- and 10-candle MAs have produced a bearish crossover and prices faced rejection at the descending 5-candle MA earlier today.

Further, the moving average convergence divergence (MACD) has turned bearish for the first time since December 2018, as discussed earlier this week.

All-in-all, BTC risks falling below $10,000 in the next 24 hours. On the downside, strong support is located at $9,097 (May 30 high). A violation there would expose the 100-day MA lined up near $8,100.

On the higher side, a high-volume break above $11,080 would invalidate the bearish setup.

That said, a weekly close (Sunday, UTC) above $12,000 is needed to confirm bull revival due to the fact that BTC has failed to close above that psychological level for three weeks in a row – a sign of buyer exhaustion noted earlier this week.

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; charts by Trading View

Source link

Continue Reading

Bitcoin

What the CFTC investigating BitMEX could mean for bitcoin and crypto market

Published

on

The Commodities and Futures Trading Commission (CFTC) has started an investigation into BitMEX, the largest margin trading platform in the crypto market, according to a Bloomberg report.

BitMEX, along with other major margin trading platforms, have not allowed U.S. customers to trade derivatives on the platform to avoid scrutiny from U.S. regulators.

The unexpected move of the CFTC comes after the remarks of U.S. Treasury Secretary Steve Mnuchin and his warning against increased efforts to tighten policies around the crypto sector.

Going after the biggest fish in the pond

Last month, BitMEX achieved $16 billion in daily volume across its derivatives products including the widely utilized bitcoin contract when the price of bitcoin peaked at $14,000.

BitMEX reaches $16 billion daily volume in June as bitcoin price achieved yearly high
BitMEX reaches $16 billion daily volume in June as bitcoin price achieved yearly high (source: coinmarketcap.com)

Primarily due to the popularity of its bitcoin contracts, BitMEX has secured its dominance over the crypto market throughout the past several years.

However, the CFTC is said to be exploring whether BitMEX has facilitated trades for U.S. customers over the years and whether U.S. customers have been able to bypass restrictions set by the exchange by using virtual private networks or VPN.

A BitMEX spokeswoman told Bloomberg that the company cannot comment on investigations by government agencies. The spokeswoman said:

“HDR Global Trading Limited, owner of BitMEX, as a matter of company policy, does not comment on any media reports about inquiries or investigations by government agencies or regulators and we have no comment on this report.”

Why is CFTC going after the biggest bitcoin margin trading platform?

Earlier this week, during an official White House briefing, Treasury Secretary Steve Mnuchin stated that with the establishment of the Financial Stability Oversight Council’s Working Group on Digital Assets, various financial agencies including the Securities and Exchange Commission (SEC), CFTC, and FinCEN will vamp up efforts to tighten their oversight on the market.

Secretary Mnuchin said at the time:

“The United States has been at the forefront of regulating entities that provide cryptocurrency. We will not allow digital asset service providers to operate in the shadows and will not tolerate the use of the cryptocurrencies in support of illicit activities. Treasury has been very clear to Facebook, to bitcoin users and other providers of digital financial services that they must implement the same anti-money laundering and countering financing of terrorism, known AMLCFT safeguards as traditional financial institutions.”

Secretary Mnuchin added that crypto money transmitters will be subject to the same standards and regulations as every other U.S. bank, indicating that FinCEN is likely to enforce existing regulations on crypto-related entities at full capacity.

The CFTC’s investigation into BitMEX, the decision of Binance to replace crypto-to-crypto trading in the U.S. with a fully regulated exchange called Binance US, and the geopolitical ban on certain cryptocurrencies by Poloniex and Bittrex indicate that companies are increasingly expecting stricter oversight in the near term.

In the short term, the BitMEX investigation could pose a negative effect on the crypto market especially due to the timing, which comes immediately after the release of the remarks of Treasury Secretary Mnuchin.

News Source

Continue Reading
Open

Close