Thread on images on the blockchain: As long as there is user-provided data, systems that store that data can be commandeered to store what is being called "illegal content." True for Google Docs, true for blockchains.
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This has absolutely no relation to hiding evil data in non-blockchain storage; in that case you can just delete (or never get it to begin with) and all your other data is intact because it has no dependency on the deleted data to use or validate the rest.
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Ok, your argument comes down to "it will always be possible for a user to determine the side effects/meta-data, and ergo, they can always encode something on a chain whose removal is problematic." This is true for Bitcoin, but there's no impossibility result backing it.
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There's also the legal issue of whether the Section 230 exemption should apply to nodes in a peer to peer system. There are many arguments and counterarguments, so I won't touch that one right now, but it's not a settled question that storing bits without a decoder is possession.
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And lastly, channel capacity matters a lot in steganography. A channel that requires millions of transactions to encode an image, costing tens of thousands of dollars, is interesting to ponder intellectually, but not a realistic threat on our way of life.
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Indeed that matters if your goal is to distribute Evil Data. It doesn't matter if your goal is just being able to jail arbitrary people participating in the blockchain.
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There's also very compact but highly illegal data you might want to distribute and make undeletable. Think things like leaked classified docs, doxing of gov't officials or other high-profile ppl, etc.
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I don't think these pose any greater threat with blockchains than they do with any other medium. If anything, a viral leak on Twitter becomes undeleteable, and visible, much faster than on Bitcoin. Your previous point stands though: sovereigns could use such data as a pretext.
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But at this point, I am not worried that states will crack down on the entire area of blockchains because of a few, or actually, just one according to the study, instance of vile material.
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