Role and importance of blockchain analytics tools and services

Blockchain analytics is crucial for analysing, identifying and clustering data on a blockchain, enabling the challenges of illegal transactions such as money laundering and fraud to be met. Private enterprises are delving into openly accessible blockchain data to reinforce the safety of cryptocurrency markets with a notable instance being the 2022 Colonial Pipeline case. In this instance, the Department of Justice seized 63.7 Bitcoins, worth around $2.3 million, showcasing the effectiveness of blockchain analysis tools in law enforcement. The providers of blockchain analytics scrape and gather transactional data from publicly accessible blockchains to link cryptocurrency holdings with illegal activities. Transactions are permanently recorded on blockchains, allowing analytics to associate them with illicit behaviour and the analytics provider assigns risk scores to wallets, aiding further investigation by law enforcement agencies. This ensures transparency and accountability in blockc…