With the birth of Bitcoin and cryptocurrencies, many individuals, including scammers, saw that there was an opportunity with blockchain technology; which would allow them to easily carry out illegal acts.
It differs from fiat money and common payments, with tokens, as these cannot be easily tracked. This is due to the privacy offered by cryptocurrencies, since there are no third parties to verify ID or personal data; instead, everything is stored in the Blockchain network and there is no precise ID.
Now, there are many companies that are using Blockchain Analytics; it is a method of finding users who make transactions and those who receive them. This service is paid and is generally to track illegal acts, as well as criminals through the blockchain.
Despite the fact that cryptocurrencies can be misused, methods have been created to trace all kinds of malicious transactions and thus prevent or prevent the misuse of technology.
Clearly, finding these tracking methods was challenging for these companies. Because previously it was impossible to spy on this type of transaction; this means that cryptocurrencies are not as secure after all.
It can be concluded that Blockchain Analytics is a method used by some companies to be able to track users or individuals who are making purchases with cryptocurrencies legally or illegally.
Why use Blockchain analytics?
In theory, Blockchain Analytics is used to be able to find anyone who has made a transaction with any token in the public blockchain. However, it also serves to avoid all kinds of activity that is outside certain legal conditions.
Blockchain analysis allows companies to know some data of the person who has made the transaction. In addition, it also guarantees users greater confidence, since they will be able to know who they are actually sending their money to.
It should be noted that using Blockchain analysis has allowed many users to know where their money will really go. Although, the government and private companies are also using Blockchain Analytics, in order to know what type of users are misusing this technology.
How to do Blockchain analysis?
Blockchain Analytics analysis consists of using the transactional hash function to find the personal information of a user. More information is available at Teekia Tiwari 5 coins
One of the best-known Hash functions is SHA-256, which is found in the Bitcoin protocol; it is used in almost all occasions to encode information. However, thanks to it you can also trace transactions that are along the blockchain; either wallet addresses or funds.
Furthermore, the aforementioned function can also be used to shorten a long chain of transactional data, transform it into a short one, and create a unique ID for each transaction; therefore, applying the SHA-256 function, each data found can be identified and classified.
On the other hand, finding the user’s information in the blockchain can be extremely simple, because, when making a payment, the transaction must go through a payment processor and in said processor the personal data of the individual is found, such as name or account information.
Companies that do Blockchain analysis
For now, there is a wide variety of companies that work with Blockchain analysis. This is because it turns out to be very important for some governments to maintain control over cryptocurrencies.
However, Blockchain Analytics is not as simple as it sounds; because composite data can also be found in records, which make querying or analysis more difficult.
Despite this, work is underway to create new methods to make data query and Blockchain Analytics much easier.
In addition, these corporations are not only looking to develop new tools to offer more utility, but they are also looking to create analysis tools that have higher performance, such as; economics, forensic analysis or others.
It should be noted that companies like Chainalysis and Sentiment have also created their own Blockchain Analytics tools, either to collaborate with the government or with other projects. Furthermore, a startup known as Cipher Trace recently created a tool for the prevention of money laundering, abbreviated as AML.
The emergence of Blockchain Analytics will serve to prevent a large number of possible problems related to BTC, ETH, XMR or other digital currencies.