The 21-page analysis indicates an increase in the commercial sexual exploitation of children online. "We first saw commercial child sexual abuse websites on the open web accepting bitcoins as a payment mechanism in January 2014," it said.
The watchdog added that over the course of the past year, several of the "most prolific" commercial child sexual abuse web pages tracked by IWF also began to accept bitcoins as a payment mechanism.
According to the study, 37 websites were reported to the IWF for trading child pornography between January and April 2014.
Bitcoin is a decentralized virtual currency, making it almost impossible to trace payment origin. The IWF said it is working with several of the world's largest bitcoin exchanges to share intelligence and develop strategies for preventing the abuse of bitcoin by pedophiles.
The group estimates that in 2014 it assisted in the removal of 137 percent more child sex abuse images than in the previous year. Fifty-six percent were hosted in North America, while 41 percent were in Europe, including Russia.