How do blockchain forensics and asset tracking work?


Blockchain forensics involves the analysis of blockchain data to investigate criminal activities such as fraud, money laundering and illicit transactions. 

Nonetheless, the methods employed in blockchain forensics can vary depending on the particular application and the type of data being evaluated because it is a complicated and rapidly developing area. Yet by combining a variety of strategies and resources, investigators can better understand criminal activity on the blockchain and contribute to the fight against financial crime.

The following are some of the key techniques used in blockchain forensics.

Network analysis

Blockchain transactions take place inside a network of nodes. Using network analysis tools, it is possible to examine this network and spot any nodes that may be participating in illicit activity. Analyzing IP addresses, geolocation information and other network data may fall under this category.

Machine learning

With machine learning, it is possible to examine big blockchain data sets and find trends that could be challenging to spot using more conventional methods. Anomalies that can point to illegal activity can be found by grouping addresses, recognizing strange transaction patterns and other criminal activities.

Transaction graph analysis

Each transaction on a blockchain is connected to one or more prior transactions, forming a structure resembling a graph. Transaction graph analysis involves analyzing this structure to identify patterns and connections between transactions, which can help investigators to identify illicit activities.

Address clustering

Blockchain transactions are recorded using distinct cryptographic addresses, which is known as address clustering. Address clustering is a method for finding linked addresses and transactions by analyzing these addresses. This can aid investigators in locating people and groups engaged in criminal activity.

Data scraping

As blockchain data is made available to the public, it can be exploited to extract pertinent information using specialized tools. Transaction data, addresses and other metadata that may be utilized to spot trends and linkages between transactions are all examples of data scraping.

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