How blockchain analytics works
Every transaction on a public blockchain is visible to anyone, permanently. Analytics providers turn that raw data into something a compliance team can act on, in four steps:
- Clustering: grouping the addresses that one entity controls
- Attribution: naming the clusters, from exchanges to darknet markets and sanctioned parties
- Tracing: following funds from address to address, across tokens and bridges
- Scoring: rating an address or a transfer by its exposure to risky categories
Who uses blockchain analytics
Exchanges, on-ramps, custodians, payment firms and banks use it to screen wallets and to monitor each deposit and withdrawal, through an API, alerts and a case-investigation tool. Police, tax authorities and regulators use the same tools to investigate thefts and fraud and to trace stolen funds.
The limits of blockchain analytics
The output is probabilistic. Clusters are inferred and labels come from each provider's own research, so two providers can score the same address differently.
Mixers, privacy coins and cross-chain bridges make tracing harder, and analytics sees nothing of trades settled inside an exchange's own books. A firm therefore sets its own thresholds, records why each alert was closed, and treats a score as a reason to look, not as a verdict.
Blockchain analytics, KYT or a block explorer?
- KYT
- The use of analytics on a firm's own transfers as they happen. Blockchain analytics is the wider discipline, and the data behind it.
- Block explorer
- A website that shows raw transactions and balances. It names nobody and scores nothing.
Where Blockchain analytics shows up in a platform
Modules that do the work
- Compliance reportingTransaction monitoring, the Travel Rule and regulatory reports, ready for your regulator.
- KYC / AMLIdentity checks, screening and ongoing monitoring, with the verification provider you choose.
- Fraud & riskReal-time fraud scoring, limits and case management, with the risk engines you already trust.
- Analytics & monitoringProduct analytics, attribution, engagement and crash reports, on a tracking plan you control.