[tlrobinson]

If I understand correctly, these people are using special software to encode data in transactions, namely the output addresses. You can only embed arbitrary data in blocks if you're able to mine a block (like Satoshi's headline in the genesis block and Dan Kaminsky's Ben Bernake ASCII art), otherwise you need to encode it in the transaction data.

[rlpb]

Anyone sending Bitcoin can add arbitrary data in his transaction; no need to be a miner: https://en.bitcoin.it/wiki/Script#Transaction_with_a_message

[ZeroCoin]

Well then all of the worries about this child-porn being in the blockchain are warrantless.

You could create a link to child-porn from this very comment I just posted using the right cipher. I am sure of it.

[gizmo686]

What if A) your comment was preserved as a part of the block-chain that could not be removed without doing serious damage to bitcoin. And B) the cipher you are using is a publicly known cipher recognized as the standard way of encoding data into the block-chain.