It’s well-known among the Bitcoin community that you can use a loophole to put coded messages into the database. Mostly it’s ASCII art and goofy stuff, but some Bitcoin users may have put that purpose to vile use.
The good news is that the casual Bitcoin user isn’t going to see the worst of humanity: The links are in hexidecimal code, so you’ve got to know they’re there and be actively looking for them to find them. Here’s a good explanation of how it works:
Imagine if someone picked a penny stock on the NYSE and made a sequence of apparently pointless trades. Then they announced that the prices of their stock trades actually encoded links to some “evil” websites. You know, maybe $0.01 means “a” and $0.02 means “b”, etc. Stock market tickers are public, lots of places archive that data, so now lots of people have “links to evil data”. Except really they don’t. What they have is a list of stock trades. You’d need special software to turn that into some other kind of data.
This is what someone has done with Bitcoin. They sent a series of monetary transactions that did not actually represent real trades, and then announced that with a special program you could turn them back into some text. That text then contains links to, well, I don’t actually know what because I haven’t looked. But let’s assume it’s bad stuff.
The bad news is that these links are officially recorded in the “blockchain” of those Bitcoins. As in, they’re there forever and can’t be removed.
Unfortunately for Bitcoin, the very things that appeal to its users, like encryption, anonymity, and the lack of involvement of the government, also greatly appeal to highly loathsome human beings, so it seems like these links are, at best, trolling, and at worst using Bitcoin as a back channel for darker purposes.
What does this mean legally for Bitcoin users? That’s an excellent question. In the US, at least, you have to “knowingly possess” or “knowingly access with intent to view” child pornography for you to be in trouble, so basically you’d have to find the code, translate it, and go to the links to be legally culpable. Elsewhere in the world, that may not be the case.
It’s unfortunate this experiment was tainted by this, but the reality is, it was going to happen sooner or later. Hopefully Bitcoin can figure out a way to remove the data and find the perpetrator; until then… be wary of buying.