Being able to monitor and query public blockchains is one of the fundamental properties of cryptocurrencies. Publicly verifiable transactions are what proves that a transfer of value occurred. Even in so-called privacy coins, there still needs to be a mechanism to prove value has been moved from one address to another.
The first block explorers were basic, used to verify a transaction had been added to the blockchain and not much more. The latest generation of blockchain monitoring such as PARSIQ offers something different. They are helping to make crypto safer, reduce market manipulation and increase transparency.
1. Making crypto safer by tracking stolen funds
There have been plenty of well-publicized hacks in recent years but it’s getting increasingly hard for the criminals to get away with the crime. This is because most cryptocurrency transactions are not completely anonymous, they’re merely ‘pseudonymous’, so once identified, stolen funds can be tracked, even when they are split up and sent to different addresses.
Taking Bitcoin as an example, a Bitcoin address has no name or identity directly attached to it, yet if someone has knowledge of the connection between you and an address then every transaction you’ve made to and from it is there to be seen on the blockchain.
This means that as soon as the funds are sent to an exchange, with the intention to convert the funds into fiat currencies, they can be frozen and recovered. In addition, once bitcoins are sent to a crypto exchange, a paper trail is created that can be linked to an individual. This is because every account on an exchange should — theoretically at least — be subject to KYC (Know Your Customer), and therefore have the ability to be tracked back to a particular person.
Even without sending cryptocurrencies to an exchange, so-called Blockchain forensics has become big busines...