Transaction tracking = end of anonymity?

On the Internet, it is often possible to find articles, in particular related to digital assets, where the phrase:

“Digital assets are an imaginary anonymity that lured people at the dawn of cryptocurrencies.”

Perhaps you may have the impression that this speech is outdated and tired. But in fact, anonymity is really at stake, and why, we’ll look into this article.

What will it be about

First, we have to figure out what we’re going to talk about.

Decentralized technologies are an innovation in the exchange, recording and storage of digital data between repositories. They can also be concentrated around the world, not in one place.

In the cryptocurrency industry, as everyone knows, the most popular decentralized technology is blockchain. Anyone who wants to use the network can use it, that is to say, translate it. The translation inside the network is confirmed by miners. Therefore, for the translation to be successfully executed miners have to confirm it. The miner is rewarded depending on the network in which it is located, as well as on the used – the PoW or PoS algorithm.

If a PoW algorithm is provided, the miner will extract digital assets using asycuits, video cards and software. If this equipment is not available, it will be necessary to purchase it.

When working with PoS, the miner buys the cryptocurrency and provides it to solve the equations. The cryptocurrency is a sort of add-on to the blockchain that takes on its technical qualities and serves as a means of payment within the network.

Is the anonymity of cryptocurrencies an illusion?

Blockchain is divided into two types: public and private. In public, as you can guess, all online activities can be seen by any user. In private blockchain information about the actions being carried out is accessible only to a small number of persons.

The TOP 10 coins by capitalization belong to the public blockchain. Private ones are usually created by companies to store information that will be available to a small circle of employees. It turns out that the public blockchain has data transparency. This exists so that everyone can verify the correctness of the tasks performed, but this has become the main problem of anonymity.

During the registration of a Bitcoin purse, the user will need nothing but e-mail. The address itself will contain no information about the owner, as it will contain only numbers and Latin letters. However, by knowing the address of the wallet, it is possible to trace all the actions that have been carried out with it since its creation. For example: You can find out when there were first and last transactions, how many funds were transferred, to what address, time of transaction confirmation, etc. Also, when sending a cryptocurrency, the transaction number can be used to trace: how many confirmations it has (minimum number – 2), what commission, approximate time of dispatch, network load.

Software development to track transactions within blockchain has been actively pursued since 2014. According to statistics, at that time the number of transactions related to the Darknet or money laundering was 90 per cent. By 2020, that figure had fallen to 10%, but in absolute terms it had risen.

In fact, the solutions described above are available to anyone. Further, the situation is somewhat more complex: such software is created and used in cooperation with the law enforcement agencies of different States and is often used for their own purposes. In addition to assisting government regulators, these organizations facilitate the search for attackers, such as in the theft of cryptocurrency from exchanges.

Creators of tracking software


This is perhaps the most famous company in this direction. Company has been developing tracking software since 2014, and since 2015 has been actively cooperating with the United States Federal Revenue Service (IRS). The company helps track cryptocurrency holders in the United States who do not pay taxes for digital asset transactions. Subsequently, the company began cooperation with Interpol.

The company gained wide popularity in 2016: with the help of the software developed by it, it managed to find the traces of the attackers who robbed the Mt.GOX exchange, as well as to collect an evidence base against the DD4BC hacker group. After that, Chainalysis established themselves as specialists in their field, so now they have a number of profitable collaborations, as well as regularly receive investments and grants.

At the moment, the company has two main products: Chainalysis Know Your Transaction (KYT) and Chainalysis Reactor. KYT was created as an anti-money laundering tool. Using the API, the software monitors information about digital assets available on the network in real time, as a result of which high-risk transactions are detected, the funds in which could have been obtained illegally. Chainalysis Reactor will launch an investigation offline, having at least minor leads on digital assets. Chainalysis cooperates with a large number of companies and countries in order to ensure the legal circulation of digital assets, and also calculates high-risk transactions, which it informs cryptocurrency companies about. But there is one caveat, an ordinary network user will not be able to use the company’s services.


The Crystal software is owned by Bitfury Group. It was released in 2018. The software was developed specifically for tracking transfers in the bitcoin blockchain, and was presented to law enforcement agencies and large financial organizations.

Crystal functions as follows: the specified addressees and sets of transactions are taken as a basis, after which all the information in the bitcoin network is analyzed. After a thorough analysis of the network, Crystal goes beyond it and begins to collect information on various sites, forums, and social networks. networks, etc. After collecting all the necessary information, the tool begins to visualize the entire path of digital assets, up to their withdrawal and conversion to fiat. No matter how many end accounts there are and no matter how protected they are, Crystal will find all the necessary information about the movement of funds.

The most famous proof of the effectiveness of the Crystal tool is the case of the WannaCry ransomware virus. In 2018, with the help of this virus, attackers managed to steal $1 billion. The Bitfury Group company used its new software and within three hours the movement of all the stolen funds was established: they were focused on the Changelly and ShapeShift crypto exchanges.

Crystal is one of the few software that is available not only to states and large corporations. By filling out a special form on the official website of the company, you can get a demo version of the tool for two weeks.


Initially, the company specialized in storing private keys from bitcoin addresses, but in 2014 there was a rebranding. After that, the company began active cooperation with law enforcement agencies, helping to find and prevent money laundering that was obtained illegally.

A year later, Elliptic developed new software, with its help it became possible to track bitcoin that was sent to terrorist organizations. Since that time, the company began to work closely with the CIA and the FBI. How the company’s representatives explain the work of their software: registers with court documents are monitored, web scraping (data extraction from Internet pages) is used on web resources and the darknet. Information is selected in different planes, and this gives the result almost always. Further, in order to link a crypto wallet or transfer with a real person, it turns out on which platform the actions with the funds were performed. After these actions, monitoring of all transactions on the site begins, in order to find similar ones, with withdrawal to fiat accounts.

There is no data on the Internet about how exactly the company’s cooperation with the FBI and the CIA takes place. But since they still continue to work together, we can conclude that everything is going fruitfully. The company’s services are not distributed in the public domain.


What conclusion can be drawn from all of the above? Transfers and wallets could be monitored from the very first day of the appearance of bitcoin. For the entire time of its existence, these opportunities have not changed in any way, thanks to the public blockchain of the main cryptocurrency. It is quite possible to get to a real person by tracking his transactions, but an ordinary person will not be able to get access to such software. Such software is usually used by law enforcement agencies and cryptocurrency exchanges.

It turns out that only a small part of the crypto community can track the movement of digital assets. Attackers will not be able to gain access to such software for further extortion of funds. The only people who can get upset because of the existence of such software are those who want to remain completely anonymous. If law enforcement agencies are interested in them, they will most likely be caught.

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