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    Crypto monitoring tools and blockchain analysis help to avoid cryptocurrency fraud

    Tanya Sharma
    Tanya Sharma
    Published on January 12, 2023 5:00 PM

    Updated on January 16, 2023 7:59 AM

    Crypto firms must deploy blockchain tracking tools, which are utilized for operations such as crypto laundering probes, to prevent the exposure of criminal transactions to their company.
    Crypto monitoring tools and blockchain analysis help to avoid cryptocurrency fraud
    Source: Unsplash

    Blockchain is understood as software that powers bitcoin exchanges by the mass of the world's population. Its purpose is to build a common ledger that maintains all information about all online purchases made over various protocols.

    Aside from archiving, Blockchain technology aids in the verification of online payments. In the absence of a centralized authority, it also aids users in confirming transactions.

    Cryptocurrency transactions are strongly focused on Blockchain technology. As a result, it, like any other sort of money conversion mechanism, is vulnerable to fraudulent conduct. Blockchain analysis can help detect such scams and unusual activity.

    Related: Blockchain Technology Advances to Avoid Retail Burglary

    What Precisely is Blockchain Analysis and Crypto Monitoring Tool?

    Blockchain analysis is the process of analyzing, detecting, clustering, modeling, and graphically depicting information on a blockchain, which is a cryptographic distributed ledger. The goal of blockchain analysis is to discover crucial information about the many course activities in cryptocurrency transactions.

    For example, when two rogue FBI agents stole Bitcoin (BTC) while investigating the Silk Road darknet market in 2015, Chainalysis, a blockchain research tool, garnered headlines. Chainalysis is a blockchain data platform based on blockchain technology that assists government and corporate sectors in detecting and preventing illegal cryptocurrency use.

    Through blockchain analysis, one can uncover real-time changes in the blockchain's processes. If any of the changes appear suspicious, blockchain analysis can assist you in taking immediate action.

    As a result, blockchain analysis increases the transparency of cash movement from one source to another.

    How Blockchain Analysis and Crypto Monitoring Prevent Cyber Crime?

    Blockchain analytics software helps businesses become compliant, minimizing the risk of bitcoin heists.

    Anti-fraud cryptocurrency monitoring systems look at the publicly available information and transactional data to detect unethical and illegal behavior. When a digital crypto-wallet transaction is completed, the data is permanently preserved on the blockchain and thus cannot be changed or erased.

    When unusual behavior is detected, the wallet or transaction is assigned a risk rating, reviewed for its risk score, and then allowed, resulting in an end-to-end trace. The crypto regulatory software's data collection and activity identification operations are underway. The assessments serve as the first line of defense in ensuring that fair and lawful methods are followed, hence contributing to the cleanliness of crypto ecosystems.

    For example, there’s a very famous page on Twitter by the name Whale Alert which generally tweets the major transactional records that happened on Blockchain. It uses crypto monitoring tools and some Blockchain analysis to find out the address as well as the transaction path. 

    Various Applications of Crypto Monitoring and Blockchain Analysis in Business Compliance

    Preventing Fraud in Supply-Chain Analysis

    As the supply chain involves numerous people and the flow of goods/services, there is a high possibility of fraud. In Indonesia, one form of supply chain fraud is the misuse of subsidized fertilizer. The culprits frequently sell subsidized fertilizers for a higher price beyond the region of responsibility.

    To limit the movement of criminals, the Indonesian government could use blockchain in the provision of subsidized fertilizers. Because the information is spread transparently on the network and cannot be removed, information on subsidized fertilizer products that have been digitized on the blockchain is traceable.

    Preventing identity theft

    The worst consumer data leak in 2017 resulted in losses of up to USD 242 billion. According to the findings of global research conducted by the IBM Institute for Business, only 16% of organizations indicated they could detect fraudulent attempts. The stolen data is subsequently used against the data owner's customers. 

    Blockchain technology can protect consumer data against theft and misuse. Verified data saved on the blockchain cannot be removed or manipulated, and only authorities have access to it.

    Preventing Financial Frauds

    Many factors complicate financial transactions, including the requirement for security, the time required for settlement, disparities in currency denominations, third-party mediation, and others. The major aim of fraudsters is a multi-step procedure, especially one that requires human interaction. With blockchain, information can be communicated in real-time, and data in the system can be updated with the approval of all parties involved. The blockchain system can help to speed up the procedure and reduce the risk of fraud.

    Challenges Faced During Blockchain Analysis

    Several anonymity tactics, such as the use of mixers, multiple accounts, and non-compliant exchangers, make blockchain analysis difficult.

    Skilled criminals and qualified crypto speculators frequently try to fool forensics teams or crypto monitoring systems by employing a variety of ways and methods to limit blockchain research.

    One of the most prevalent techniques is to employ mixers to aggregate data from several senders while concealing their identity. The originating sender is disguised since the mixed data is transmitted from a single address; all other locations are unknown.

    How do you spot and avoid cryptocurrency scams?

    Blockchain analysis tools are one approach to protecting yourself against crypto scams. Another approach is to be proactive by being in control and not making hasty decisions.

    To avoid jeopardizing users' finances and trust, businesses in the cryptocurrency market should use blockchain monitoring and analysis tools. Furthermore, one should maintain control and resist unwelcome investment pitches, especially those offered over the phone.

    If you're considering investing, obtain independent advice and do extensive research on the company first. Do not be enticed by the projects' fantastic return on investment or their professional-looking websites.

    You should be aware that a respectable bank or financial institution would not require you to hand over your money immediately. Be wary if you're pressured to invest quickly or if you're offered benefits that appear too good to be true.

    Blockchain FAQs

    How can cryptocurrency be monitored?

    Crypto transaction monitoring entails gathering and analyzing massive amounts of data that would be impossible to process manually. To manage this, businesses should adopt a variety of automated AML technologies to guarantee that suspicious conduct is recognized and reported to authorities as soon as possible.

    Which is the best cryptocurrency monitoring app?

    Top Crypto Portfolio Tracking Apps

    • CoinTracker.

    • Already.

    • Kubera.

    • Shrimpy. 

    • CryptoTrader. App.

    • CoinTracking.

    What is the best reliable cryptocurrency tracker?

    CoinMarketCap is one of the most trusted cryptocurrency price trackers in the world. Investors can also benefit from the company's portfolio tracking service. Though the platform's functionality is limited, it can be a suitable option for traders on a tight budget.