What, if any, solutions have been proposed for such situations? Have there been any lawsuits or proposed legislation to combat such crimes?
The cost to sustain an illegal media attack such that consecutive blocks contain such data is unsustainable and far easier to ameliorate than a 51% attack. According to this $76k per gigabyte on Eth. https://ethereum.stackexchange.com/questions/872/what-is-the...
How do you alter a block without altering the headers of every other block afterwards? Unless you are capable of second pre-image attacks on modern cryptographic hashes that's simply not possible. What you have is a database, not a blockchain.
How do you get everyone to agree to fork each time someone stores or identifies offending material (or a pointer to such) on chain?
At least in the Ethereum DAO case, everyone had a vested interest in switching to the fork.
You would need a regularly scheduled "Hard Fork Thursday" or similar to effectively address the issue, and that's quite unlikely as this introduces new vulnerabilities.
If someone wants to access resources that were pruned (ex: call an old contract), they will submit the state to the network along with a proof that the data is correct. In this model, you’d have to store the illegal content yourself in order to ‘rehydrate’ it into the current state of Ethereum.
What is the practical solution? Clean nodes. If such web server is in a jurisdiction of said illegal content, it must run a clean node that specifically filters such content to the web. This technology exists today, it's called "moderation", it's just that the backend is a MySQL database, not a blockchain.
As there are a lot of people who are quite opposed to Bitcoin/PoW/blockchain/etc, I assume if it was true, someone would have come up with some indisputable, solid evidence for it, and it would make the tech news rounds for quite some time (there are enough anti-Bitcoin writers and commenters that such a thing would never die, and would be brought up with some links to the evidence in literally every article written about Bitcoin).
As that's not happened, I remain inclined to treat it as rumors and "But if you use this OTP you can get the following out!" sort of trickery.
There are JPGs, ASCII art, PDFs, religious messages, firmware keys, "illegal" prime numbers and all sorts.
Is there anything worse than that? There are certainly some GPG encoded files in there. Perhaps someone is planning on shorting Bitcoin and is waiting to announce something so evil is stored that possession of the chain becomes a criminal offence is most countries.
However, the specific claim of CP remains, as far as I'm aware, entirely hypothetical. And I'm at least not aware of any legal precedent that says the possession of random data, of which you don't have the keys, and don't have any reason to know the content of it, is illegal.
I found this reference for you: https://fc18.ifca.ai/preproceedings/6.pdf
See under "Illegal and Condemned Content":
> Bitcoin’s blockchain contains at least eight files with sexual content. While five files only show, describe, or link to mildly pornographic content, we consider the remaining three instances objectionable for almost all jurisdictions: Two of them are backups of link lists to child pornography, containing 274 links to websites, 142 of which refer to Tor hidden services. The remaining instance is an image depicting mild nudity of a young woman. In an online forum this image is claimed to show child pornography, albeit this claim cannot be verified (due to ethical concerns we refrain from providing a citation)."
I'm sure if you really put your mind to it, you could find and recover the images, but then you'd just have illegal content and that's not very useful, so why dig for it?