One of the largest roadblocks towards gaining widespread acceptance for cryptocurrencies of all stripes as asset classes is their complexity, and their lack of transparency. Government’s literally have no way of tracking their movements, which is great for the privacy of the average citizen, but also great for organized crime.
The most popular cryptocurrencies, generally corresponding to Bitcoin, Ethereum and Litecoin can be tracked from mining to their locations, but it’s far from a transparent exercise. It involves following a series of numbers along a lengthy path throughout its lifetime, until eventually it lands in an encoded wallet corresponding to an end user. It’s an understatement to say it takes awhile, but if you’re diligent enough and you’ve got time to burn, it can be done.
Here’s a quickie two-minute tutorial:
Go to a site like: https://www.blockchain.com/explorer. Add the address, the transaction number, or the block number depending on what you’re seeking. The search mechanism will show you all of the transactions that have gone on with that number. Now you can spend the days or weeks, trying to pinpoint whatever you’re looking for.
Good luck.
Or you can hire BIGG Digital Assets (BIGG.C), formerly Big Blockchain Intelligence, to do it for you.
And do it in seconds.
The company has developed a proprietary system that leverages machine learning to comb through that data, and they’ve signed a one-year contract with a United States federal government agency. Naturally, BIGG can’t name the agency for security reasons, but they are being paid $389,000 for their license.
The software is a tracking, tracing, monitoring software for cryptocurrencies. The software currently supports bitcoin, litecoin and ethereum, but they have plans for more. They’re working diligently to bring in more.
What they’re doing with it is both fascinating and necessary:
The company is working to cast some daylight into the dark alleys of the crypto-space.
“It allows for visual analysis, and a monitoring function for investigators to see and visualize transactions across the blockchain,” said Robert Whitaker, director of forensics and investigation for the company.
They don’t keep track of each of user, but instead follow the number trail, keeping abreast of everything that happens on the blockchain. The company clusters transactions and other actions on the blockchain, gathering them together into recognizable groups, and search for patterns.
The company services law enforcement, government agencies and private companies that are subject to regulations by financial agencies, and also assists banks with compliance. It allows these companies to watch how value flows in and out of certain cryptocurrencies. The company doesn’t carry personally identifying information, so your privacy is secure, and they don’t tie transactions to specific people. Instead, what they’re interested in agencies and other large scale groups, and their activities.
What about Monero, Dash and Zcash: the privacy coins?
BIGG does not track them because it would be time and resource consuming, but also because they don’t see a large future for those coins moving forward. Regulatory compliance has become a factor for exchanges carrying these coins.
“Several large exchanges have actually dropped Monero, Zcash and other privacy coins, because they have a hard time with the compliance features and certainly with the task force coming in and saying that digital asset service providers will have to be compliant to be in operation,” Whitaker said.
The truth about the privacy coins is that they don’t really make sense in a business sense. They’re only really for ideological purists—those that believe in Satoshi’s dream of 2008-2009—but the reality is that if cryptocurrency is going to acquire widespread adoption, then these coins will need to be phased out.
“The reality of the situation is you can’t, unless you’re party to the transaction, see into a transaction and especially with Monero. So it makes it difficult for companies to interact with Monero, Zcash and that kind of thing,” Whitaker said.
No legitimate company is going to want to interact with a coin they can’t interface with.
“We’re crypto-enthusiasts, but we understand that in order for it to go mainstream, there has to be a way to make it compliant so that we’re not bringing in illicit funds into the cryptocurrency world,” Whitaker said.
—Joseph Morton