I've heard this called a "pee in the pool attack."
Block chains like Ethereum and Bitcoin have one intrinsic defense: they don't support very large data objects. So that makes inserting CP problematic. But someone determined enough and willing to spend money could insert a really horrible image as a series of transactions.
Leaked encryption keys for example come to mind, but I'm sure there's other examples.
E: I realise after digging it back up it's what you said with encryption keys but maybe someone else wants to look at the link too or whatever
https://en.wikipedia.org/wiki/AACS_encryption_key_controvers...
They tried to censor the blu-ray key, but that survived 3 years before bitcoin was invented
Also if say CP is currently distributed through compressed archives even if they are PW protected it’s not like that 7zip then somehow becomes the illicit material. If you host the archive you are on the hook of distributing CP even if it’s encrypted…
https://www.theguardian.com/technology/2018/mar/20/child-abu...
This is precisely why they'll fail (aside from technological issues): the rank and file person on the internet does NOT want a Wild West when they go to visit a news feed. Hell, the average person doesn't even really like curated content. They want a chronological list of things they decide to be relevant and nothing else. Just look at all the complaining every time Instatwitter changes an algorithm and hides the method for sorting by most recent.
And what they don't know yet is that all these big companies, if they use this technology, they're going to use them in very focused ways to reward people and prevent them from abandoning their platforms. Because "free" has many meanings, but none of them are inherently exclusionary from corporate competition.
An interesting possibility is that illegal content gets permanently inserted into a blockchain, which could make running, for example, an ethereum node very illegal.