The rise of blockchain technology offers an alternative future – a future where information and data are more open and accessible, not built behind the walled gardens of any group, and where the knowledge gap between the individual and the institution is marginal at best. Although blockchain is transparent and available to everyone, it is difficult for most to take advantage of it. Analytics platforms make it easy for the masses to gain insights from blockchain data.
Blockchain analytics is the process of analyzing and interpreting the data stored on the blockchain. It uses special software and techniques to extract data from the blockchain and gain insights into user behavior, transactions, and other aspects of the blockchain ecosystem. In this way, users gain valuable knowledge that would otherwise be hidden in traditional systems.
This has tremendous value for regulators, law enforcement, businesses, and even individuals. Regulators and law enforcement can gain a complete view of illegal transactions and track movement, allowing them to discover the identity of criminals over time. Corporates and business entities can get a complete overview of the transactions made by suppliers or third parties, verifying the legality of their claims. Individuals gain insight into what top investors do, the inner workings and operations of the companies they invest in so they can make more informed decisions that level the playing field.
So, where is blockchain analytics used and how? Here are three use cases of blockchain analytics in real world.
Secure Accurate VASP Insights
Virtual Asset Service Providers (VASP), like crypto exchanges, are different in composition. In the crypto market, VASPs range from companies operating in highly regulated systems to companies with no regulatory oversight and even no identifiable ownership. Therefore, it is key for companies to be able to differentiate these VASPs to determine and manage risk.
Ensuring due diligence is also the biggest concern. Blockchain analytics technology allows you to better understand the insights needed to perform due diligence. By achieving VASP due diligence, your crypto company or financial institution can ensure that no transactions are made with VASPs with insufficient compliance checks.
Identify Risky Customers
Similar to screening cryptocurrency wallets, blockchain analytics providers can assign risk scores to specific wallets and flag them as risky assets. If a wallet is checked and links to other suspicious or illegal transactions are found, the wallet is marked with a risk score. With a rapidly growing business, the risk of coming into contact with new criminals increases. Increasing growth means greater global coverage, which in turn requires more compliance.
Blockchain analytics can be used to analyze transaction data. Coupled with the provider’s extensive knowledge of illegal cryptocurrencies, cryptocurrency companies have the ability to adapt the situation to their needs and requirements. This means that the client understands which types of illegal activity are most relevant to their situation and how the associated risks can be mitigated.
Block Risky Transactions
In many situations, crypto exchange providers try to expand regionally. This usually means they need a regulatory license to operate in certain jurisdictions. Blockchain analytics providers can help them. Blockchain analytics is quickly becoming the standard for continuous security and compliance, and these use cases are not the only ones the technology has to offer. Companies have developed useful resources for gaining a deeper understanding of blockchain analytics and how businesses can scale, evolve, and continue to grow while minimizing risk and exposure.