Bitcoin Knots supporters have argued in recent months that a change in an upcoming release of Bitcoin Core could open node operators up to legal attacks.
The basic argument is that OP_RETURN outputs larger than 83 bytes, which will be relayed by default in Bitcoin Core version 30, will allow users to upload illegal content, such as child sexual assault material (CSAM), into the mempools of Bitcoin nodes.
While the potential for attackers to upload CSAM to the blockchain is far from a newly-discovered attack vector, Knots proponents make the case that the general acceptance of larger OP_RETURN transactions on the network changes the implicit nature of operating a full node and creates a stronger case of liability for full node operators.
This is a point of view that has been shared by many individuals associated with the bitcoin (BTC) mining pool Ocean, which has been the strongest proponent of Bitcoin Knots node software up to this point.
Ocean founder and Knots maintainer Luke DashJr has gone as far as to claim that Bitcoin “doesn’t survive” and will “cease to exist” if Core v30 becomes widely adopted.
While there’s been plenty of intense discussion around this theory on social media, input from actual lawyers specializing in Bitcoin and related technologies has been limited.
So, in an effort to lend the discussion some much-needed legal insight, Protos reached out to a range of legal experts to get their thoughts.
Read more: Three sneaky changes in Bitcoin Core v30 are confusing node operators
Summary (TL;DR)
- The general view from legal experts who were willing to comment is that the issue of potential CSAM material proliferating around the Bitcoin network is one that already exists.
- Only one of the seven respondents indicated the upcoming changes in Bitcoin Core v30 could do any practical harm.
- As one lawyer pointed out, the largest threat may be more about politicians eventually using the issue as a political attack vector; however, the reality is that attack vector already exists in a variety of forms.
It should be noted that none of these comments should be taken as legal advice or official legal opinions.
Read more: Bitcoin Core versus Knots disagreements go parabolic
Bitcoin Policy Institute Fellow and Consumer Choice Center Deputy Director, Yaël Ossowski
According to Ossowski, “The amateur legal theory dogmatically espoused by a certain swathe of Bitcoiners about illegal content on the blockchain serves more as a justification for filtering than reasonable legal analysis.”
He continued, “Most people can understand the fringe case or attack vector, but it looks like a solution in search of a problem rather than the other way around.
“Specifically, it comes down to liability. Would nodes that verify, copy, and relay transaction data and blocks be liable for everything written and stored on that data set?”
In Ossowski’s view, if there’s any legal precedent or status that should guide us, it’s Section 230, and any blockchain could be considered an “interactive computer service.”
Therefore, he said, any noderunner wouldn’t legally be responsible for content generated by others.
“That’s a pretty easy case to make,” explained Ossowski. “No credible legal authority is seriously considering attaching liability to the automatic process our nodes undertake when dealing with Bitcoin.
“Some legal experts have discussed equating blockchains with piracy or peer-to-peer file sharing, but even that isn’t technologically similar enough to how Bitcoin nodes work and operate.”
Read more: Cøbra warns that Knots could threaten Core’s reference status
Bitcoin Laws founder, Julian Fahrer
“First, no court has ever held that running a bitcoin node amounts to possessing or distributing illicit material, so claims of direct liability are overstated,” said Fahrer.
“Allowing more non-financial data on-chain does expand a hypothetical risk, but that risk has always existed. Depending on how zealous a prosecutor or legislator is, there could be hypothetical liability for a node distributing for example classified information, or incitement to violence.”
He continued, “CSAM does stand alone in that there is almost uniquely strict liability for mere possession, but the fact remains that nodes operating today and broadcasting all kinds of data do represent a theoretical attack vector.
“The real threat in my opinion is politicians using these kinds of narratives — whether real or imagined or intentionally inflated — to attack BTC for political ends.
“Of course, this already happens. See for example, recent attempts from American lawmakers to associate bitcoin and crypto payments with terrorism financing.”
According to Fahrer, “The best analogy is the famous ‘$5 wrench attack.’
“In this case it’s not a wrench but the FBI knocking down your front door, but the essential point is the same. The state can come after Bitcoiners any time it wants, for running a node, or for any other reason – unless there is actual protection enshrined in law.”
He concluded, “So that’s where the focus should be in my opinion. Passing laws that protect the rights of Bitcoiners, node runners, and open-source developers.”
Read more: Does Michael Saylor even understand Bitcoin Core vs. Knots?
“The concern around Bitcoin Core’s default relay policy for OP_RETURN transactions seems to be less about a fundamental change to Bitcoin and more about optics and perception,” Gruhn said.
“It’s important to stress that this update does not alter consensus rules — CSAM or other arbitrary data could already be embedded in the blockchain. That possibility has existed for years, and indeed, such content has been discovered in the past.
“The distinction here is only whether nodes relay certain OP_RETURN transactions by default, not whether the network suddenly ‘allows’ them.”
“From a legal and regulatory standpoint,” he explained, “that nuance matters less than we’d like.
“Regulators and courts are rarely interested in the subtleties of Bitcoin Core default policies versus consensus mechanics. What they may seize upon is the narrative that Bitcoin’s developers or node operators are ‘broadening’ the scope for illicit data storage.
“Even if technically inaccurate, that framing could increase legal pressure and provide ammunition to critics.”
Gruhn explained, however, that in practice, the attack surface hasn’t changed. “Any party determined to abuse Bitcoin for non-financial data storage already could.”
“The shift in relay defaults does not materially increase the risk that CSAM enters the system — it simply affects propagation. The larger legal challenge lies in educating policymakers: the Bitcoin protocol was never designed to police the nature of arbitrary data, and pushing responsibility onto node operators misunderstands both the architecture and the intent of OP_RETURN.”
He concluded that, “While the regulatory optics deserve attention, the claim that this change ‘opens the door’ to new liability is largely FUD. The door was opened long ago; this is simply another reminder of the importance of clear, proactive communication about what Bitcoin is — and what it isn’t.”
Read more: Bitcoin Core devs call dissidents ‘Knotzis,’ find bug in their software
“I actually do see some plausibility to the Knots crew’s concerns,” said Shapiro. “I’d rate the overall risk as pretty low practically though, theoretically their points make a lot of sense.
“Most of what [Bitcoin] Mechanic says on this topic is actually a pretty good layman’s rendition of a Napster-style aiding/abetting analysis.”
“Maybe it is an attack vector,” he explained, “but I don’t see a lot of people arrayed around the world currently wanting to attack Bitcoin in that type of way.
“It almost seems like paranoia that would have made sense years ago — even Gensler, who hated crypto, liked Bitcoin.
“I just don’t see much practical risk to this because, at this point, nation states are invested in BTC. They don’t want to dismantle Bitcoin.”
Coin Center
Coin Center doesn’t see how Bitcoin Core v30 changes the potential legal arguments against Bitcoin node operators that it’s been arguing against for years.
In its response to Protos’ request for comment, a representative from Coin Center pointed to a March 2018 blog post in which it addresses concerns of illicit images on public blockchains.
When asked to clarify if the alterations coming in Bitcoin Core v30 would change anything, Coin Center stated the same arguments still apply.
The Crypto Lawyers Managing Partner, Rafael Yakobi
“I think the fears are overblown,” said Yakobi. “CSAM crimes generally require knowing possession, receipt, distribution, or an intent to view.
“Absent evidence that a Bitcoin node operator knows they’re transmitting CSAM, automated relaying typically doesn’t satisfy those elements (assuming I am understanding the mechanics at play correctly).”
Unnamed crypto lawyer
The lawyer that had the strongest level of agreement and sympathy with Bitcoin Knots supporters preferred to remain unnamed for this report and initially responded:
“Long story short, it’s a huge concern. Hosting CSAM on a hard drive is a strict liability offense — meaning that the fact of hosting it, not the state of mind associated with that fact, is what triggers criminal liability.
“This has been a known problem with decentralized storage solutions for years and, I suspect, is part of the reason that those solutions haven’t taken off. It doesn’t matter whether the data is encrypted or unencrypted or in bytecode or anything else.
“If you can convert it into illegal content, it’s illegal to host.”
They added, “I’m appalled by this change, which I only just learned of when you told me about it. It would make it possible, even trivial, for a single bad actor to render the Bitcoin blockchain legally unhostable on a global basis.
“Luke is right and Core is wrong. It’s not a particularly close call.”
Read more: Bitcoin Core devs schedule OP_RETURN change for October
However, when pushed for more clarity on the specifics of how Bitcoin Core version 30 changes things, the lawyer agreed the problem already exists.
“It is already an issue, yes, and the fact that this kind of attack hasn’t happened yet is a question of luck rather than capability,” they said.
“It would be safer for Bitcoin to optimize for content-addressable links to offchain content like an IPFS hash. Pruning reduces (although doesn’t eliminate) the risk for full nodes but wouldn’t solve the regulatory problem for archival nodes.”
When asked to clarify whether the Bitcoin Knots supporters are correct in terms of Bitcoin Core version 30 making the situation worse, the lawyer responded:
“The more onramps you create to store large content blobs in Bitcoin, the more likely it is that one of those onramps is going to be misused for unlawful purposes.”
They added, “I have seen the back and forth on this question between crypto-lawyers on X and have largely avoided wading into the discussion as it has devolved into something of a pissing match between Ian Northon, from Ocean, and the rest of the bar.
“Ian’s point of view is an entirely reasonable one that I would expect any competent lawyer to raise to a corporate or institutional client considering running a Bitcoin archive node.
“Due process counterpoints from lawyers such as Joe Carlasare, raised from a US standpoint, are entirely reasonable points of view I would expect to hear from an appellate litigator.”
The lawyer also added that side effects of illegal content becoming a problem on the blockchain would include tens of millions of dollars in legal costs for companies across the industry and even the possibility of a hard fork.
In their view, the upcoming changes in Bitcoin Core v30 make the situation materially worse because it will create a censorship vector for governments by opening the door to more illegal content finding its way into the blockchain and/or node mempools.
“There are 195 countries in the world and Bitcoin runs in all of them,” they said.
“If seriously illegal content starts finding its way onto the blockchain, that’s 195 separate compliance problems a company seeking to run a Bitcoin node can have. Why a core dev team would want to create a censorship vector on the world’s most censorship-resistant distributed cryptosystem is beyond me, but fortunately it isn’t my problem, it’s Core’s.”
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Source: https://protos.com/exclusive-lawyers-call-bitcoin-core-v30-csam-concerns-overblown/
