I am confused. Most nostr relays don't host any media. They might have a link to digital content but no content is hosted. Notes are plain text. Is it illegal to have a link to illegal content?
It would be sharing it so yes I think so. Link destinations can change though so ultimately it's going to come down to reports and bans by users to keep those who share bad stuff from infiltrating the good spaces.
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Biggest liability I see is DMCA requests. So relays need a takedown request mechanism for DMCA requests.
This could be pretty straightforward with authorized keys who can send DMCA notices or a DMCA webform on the relay homepage.
But at least relays can't accidentally cache/store CP. I'm thinking of implementing an AI nudity filter for my next relay. I don't want to distribute CP.
What concerns me is misinformation laws. It is much harder to systematically screen for ideas and doing so undermines nostr ethos.
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