Cryptocurrency transactions are now being regulated in some parts of the world by government agencies. However, to keep an eye on illegal transactions, a new domain of analytics, Blockchain Analytics, is being carried out. Blockchain analytics softwares is being used to examine the data stored on blockchains and ledgers for malicious practices.
What is Blockchain Analytics?
Blockchain Analytics are a series of processes that include understanding, classifying and monitoring blockchain transaction data that help understand the activities of various actors on the blockchain. Blockchain analysis consists of multiple solutions such as transaction monitoring, risk assessment and investigating tools. Blockchain tools associate the real-world transaction ids to their particular addresses to analyze the transaction activities. They also help assess the risk based on the transacted funds risks based on their origin and nature, the money flow and the history of the sender’s and recipients virtual wallets.
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Using blockchain tools, you can also visualize the transactions to the addresses manually. The analysis software uses methods like clustering, web scraping, and database scam monitoring to identify entities like payment processors. Risk analysis is performed by creating risk models trained using machine learning to help provide a risk score to every blockchain transaction. Risk models are created keeping in mind multiple parameters such as transaction amount and money flow history. Transaction graphs can be created to understand the association between them.
How Does it Work?
Blockchain Analytics tools scrape the publicly available transaction data to trace illegal and criminal behaviour. Whenever a virtual crypto-wallet transaction is made, the data remains forever on the blockchain, which cannot be altered or erased from it. When a wallet or a transaction, in particular, is flagged, it is tagged with a risk score. Any transaction that takes place is screened for its provided risk score and then approved. As the transactional data in the wallet represents all transactions that the particular cryptocurrency has been used in, an end-to-end trail is thus created. The collection of data and identification of transactions is a continuous process in the tool. The analytics act as a frontline defence to carry out fair and legal practices, helping keep the crypto environments clean.
Uses of Blockchain Analytics
The most important use case of Blockchain Analytics is to regulate the crypto business and the financial institution space. Making use of blockchain analytics helps them become compliant and lower the risk. This prevents criminal and fraudulent crypto exchange and money laundering. It also aids in surveillance and monitoring to stop conversions of funds into fiat. Through these surveillance services, a strict KYC policy can be implemented that helps identify the actual criminal. Organizations use blockchain analytics to improve protections against such fraud and detect suspicious or risky customers. The tool functionalities also include data modelling, which helps the cryptocurrency markets and transactions safer for everyone. Many companies that work with IoT devices plan to fuse blockchain analytics with IoT to allow smart contracts through IoT devices using a distributed network. Blockchain analytics can also succeed in stopping the spread of misinformation over the internet. Its transparency and immutability can help understand how the data originated and who its owner is.
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Industries that are using blockchain analytics :
- Transport: Monitoring and coordinating routes, figuring the correct transportation mode using blockchain analytics.
- Healthcare: More secure sharing of patient data within the network.
- Banking: Tracking cryptocurrency transactions, ensuring secure settlements and safer cross-border transactions.
- Retail and manufacturing: End-to-end tracking for supply chain management with a high accuracy rate.
Today, with the increasing popularity and demand of blockchain analytics in the market, several analytics tools have been developed and emerged. Here are some of the best tools and softwares:
TRM Labs
TRM Labs provides state-of-the-art analytics tools for blockchain that enable risk management, crypto fraud and crime management, and data monitoring within the blockchain network. You can also assess the risk profile of crypto businesses. TRM’s Investigator tool is best suited for financial institutions with an easy-to-use interface for cryptocurrency investigation. Transactions can be converted into visualizations with automated path detection. Irregular patterns are continuously monitored using transaction monitoring to prevent illegal activities.
You can view all the analytics products from TRM Labs using the link here.
Chainalysis
Chainalysis provides data and software services to research and government agencies. This tool is compiled with investigation, risk management and compliance tools that use advanced analytics to solve cyber-criminal activities over the blockchain network. Chainalysis’ KYT, also known as the Know Your Transaction tool, detects risky transactions from scammed and illicit addresses. Through the easy-to-use interface, investigating transactions is easier. The Reactor tool helps visualize the money flow of crypto addresses. Finally, the Kryptos tool provides profiles for all crypto-based businesses and works as a reference directory for services.
To learn more about the services by Chainalysis, visit the link here.
Anchain.AI
Anchain.AI is one of the leading providers of blockchain analytics tools and offers products powered by artificial intelligence. Its products such as BEI API, an anti-money laundering tool, CISO; a product powered by AI that provides SecOps for risk management; and CAS, an auditing sandbox that helps analyze and deploy secure smart contracts and trusted by leading exchanges, are highly popular tools in the crypto and blockchain analytics space.
To learn more about the services by Anchain.AI, visit the link here.
Crystal Blockchain
Crystal provides crypto transaction and monitoring analysis services that follow the bank and FI AML compliance requirements. Using best in class analytics and investigation solutions to make the blockchain transparent for crypto businesses, Crystal is a modern Blockchain Analytics tool. The tool also monitors and notifies continuously of any unauthorized or unusual transaction activities that do not comply with the regulations. Web access to the platform SaaS can be made available through the Crystal Expert License, and the Pro license provides onsite installation options.
Learn more about Crystal Expert and installation using the link here.
Summing Up
As user privacy and security become increasingly important and a matter of concern, technological advancements like blockchain analytics come as a boon that ensures safety. Blockchain analytics softwares are essential for the sustainability of cryptocurrency transactions and will play a vital role in identifying related criminal activities. Therefore, thousands of businesses have started adopting these tools to prevent crimes and make their transaction space a more secure place.
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