To uncover illicit activities in Bitcoin, researchers are using state-of-the-art technology.
In 2019 a team of experts started tracking down money launderers who used Bitcoin. Initially, they were working with a small dataset of only 200,000 transactions. But even though it was so limited in size, this dataset showed some promise. And now – the present day. Those experts have achieved tremendous progress!
This time their dataset is called Elliptic2 and it contains more than 200 million transactions – can you believe that?
This is an enormous jump both in terms of volume of data collected and analytical possibilities offered by such amount thereof.
So what does that mean for us? Well, it seems like as long as we can feed detection systems with ever-growing amounts of information to be processed, the better their performance becomes at pinpointing suspicious behaviors accurately; hence my belief that there is no upper limit when it comes to feeding these algorithms with more data for them to chew on.
These algorithms are trained by researchers to detect strange patterns in the multitude of Bitcoin transactions. It works like a detective searching every nook and cranny of a messy room for evidence, only this time around, the hints are hidden within digital deals.
Now to a term called subgraphs.
While it may sound like something out of science fiction or math class, all it really means is groups of connected pieces of information within the Bitcoin network. Interestingly enough though, some subgraphs have links with illegal activities such as money laundering schemes. Looking at them closely would reveal that financial criminals use different methods in order to make their dirty dealings untraceable.
Peeling chains is one way which funds are split up into parts and sent off to many different places; it’s like dropping breadcrumbs everywhere so nobody can tell where you’ve been.
Moreover, what we commonly refer to as nested services are often employed by these shady characters too. Despite sounding fancy pantsy, all this means is that these middlemen launder money through crypto exchanges without their knowledge or consent most times.
The findings are serious. In a digital currency world, it is important that we can find and prevent financial offences. If not curbed, these acts may ruin the entire financial system. I praise the investigators for never giving up on their commitment to this issue. The continuous search for new methods by them offers hope in the fight against financial crimes.
We should be watchful and flexible in our undertakings as time goes by. Financial crime changes every now and then, therefore our ways of dealing with it must change too.
With advanced machines plus strong determination we are ready for any difficulties which may come on our way and win at last.
