Cryptocurrencies have long been associated with criminal activity, but the truth is that blockchain technology actually makes it easier to track money trails than traditional payment networks. With the right analytics tools, it’s possible to follow the movement of funds on blockchains and identify suspicious activity. While the identity of criminals using blockchain addresses may be difficult to ascertain, advancements in blockchain intelligence are making it harder for them to operate with impunity.
In a recent report titled “Predicts 2022: Prepare for Blockchain-Based Digital Disruption,” it is predicted that cryptocurrency thefts and ransomware payments will decrease by 30% by 2024. This is attributed to several key developments in the blockchain space.
1. Blockchains Are More Transparent Than Traditional Networks
Transparent blockchains provide a clear view of all transactions, making it easier to track criminal payments. With only a handful of major blockchains dominating the market, anti-fraud systems can focus on integrating with these platforms to monitor and analyze data in real-time. By converting blockchain metadata into meaningful information using machine learning and analytics, abnormal money movement patterns can be identified and flagged.
2. The Emergence of the Blockchain Intelligence Market
Companies like Chainalysis, CipherTrace, Elementus, and TRM Labs offer tools to authorities and exchanges for fraud prevention and investigation. As these tools become more democratized, individual users may soon have access to proactive warning systems to prevent sending funds to criminal addresses. However, maintaining the security of these tools to prevent reverse-engineering by criminals remains a challenge.
3. Government Intervention
Governments are taking action to combat cryptocurrency-related crime, with the US government sanctioning cryptocurrency exchanges used by ransomware criminals. High-profile hacks and ransomware attacks have also led to the return of stolen funds or law enforcement seizing them. Criminals are finding it increasingly difficult to cover their tracks on blockchains, as investigators analyze data to identify and recover stolen assets.
4. VASPs Provide Protection
Virtual asset service providers (VASPs), such as cryptocurrency exchanges, play a key role in preventing criminal activity. Transactions through VASPs are less likely to be criminal compared to self-hosted wallets or non-VASPs. In the future, it may be easier for criminals to move illicit funds through legacy payment networks than through well-protected blockchain networks.
In conclusion, while cryptocurrencies have been portrayed as a haven for criminals, the reality is that blockchain technology is making it harder for them to operate undetected. With advancements in blockchain intelligence and government intervention, the days of crypto-related heists may be numbered. As the industry continues to evolve, the focus on transparency and security will be crucial in deterring criminal activity on blockchain networks.