How do crypto monitoring and blockchain analysis help avoid cryptocurrency fraud?

The primary functions of a blockchain analysis tools include address classification, providing investigation tools, monitoring transactions and risk analysis.

The ability to link blockchain addresses to real-world identities is one of the most common uses of blockchain analysis software. Such tools use a variety of ways to identify real-world items on the blockchain. For instance, standard blockchain analysis techniques include web scraping and clustering algorithms.

Clustering is the most prevalent method for identifying entities like exchanges, payment processors and wallets in analysis tools. Similarly, web scraping is utilized to analyze the cryptocurrency market. It can keep track of price changes and preserve them for later use in your database. As a result, you’ll be able to react swiftly whenever prices hit a specified threshold.

Additionally, blockchain analysis tools provide visualization tools to investigate crypto risks and analyze blockchain addresses using transaction graphs to understand the association between two or more transactions. Furthermore, crypto compliance solutions keep track of every transaction involving your company and assess risk based on the fund’s money flow, origin and the sender’s — or the receiver’s — wallet history.

Blockchain risk analysis is carried out by developing risk models and training them in machine learning techniques like clustering to assign a risk score to each blockchain transaction. Multiple characteristics, such as the source of funds, transaction amount, destination of funds and money flow history are used to create risk models.