Topic: Blockchain Analytics is More of an Art Than Science - page 6. (Read 1362 times)

It's not the only reason to use blockchain analytic service though. For example, many such service claim their service is useful to help comply with law.

As I've said before, blockchain analysis is based on guesswork.


As soon as a transaction has been made, it is impossible to say that those coins haven't changed hands. As soon as a transaction has more than out output, it is impossible to say which bitcoin ended up where (and indeed, "which" bitcoin doesn't even exist at a protocol level). It is trivially easily to fool many of the heuristics blockchain analysis uses, such as script type matching to identify the change output, or inputs being spent together to identify co-ownership. And not just to fool them as in "they can't draw any conclusions", but to fool them as in "they actively draw the incorrect conclusion". And of course one incorrect conclusion leads them to build more and more incorrect conclusions on top, building an entire chain of nonsense which they then pass off as irrefutable fact.

I've said for a long time that blockchain analysis is provable nonsense with no scientific basis. It seems even the directors of blockchain analysis companies agree with that. But of course they will continue to peddle their nonsense to centralized exchanges and governments alike because it pays handsomely to do so.

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I did a small experiment some time ago regarding blockchain analysis: https://bitcointalksearch.org/topic/m.59905002

One particular piece of blockchain analysis software put a significant amount of coins in the wallet of various centralized exchanges in one of the categories of scams, hacks, or blacklists. Obviously the blockchain analysis software being used by these exchanges did not classify these coins in this manner, otherwise they wouldn't have accepted those coins. The fact that two different pieces of software can come to completely different conclusions about the exact same coins should be more than enough to tell you that blockchain analysis is made up trash.

One of the core principles of any piece of science is that its results are repeatable and independently verifiable. If I come up with a process to say, isolate gold from an alloy, then I publish my methods and other people perform the same steps, end up with the same results, and verify my process works. If I come up with a process to say some coins are tainted, and other people do the same thing and end up with completely different results, then my process is bullshit.

It's more similar to AI actually, which also has false positives and negatives because it's a large data-driven guessing game.

In fact, I wouldn't be surprised if machine learning is what is being used to power these blockchain analytics services.


Nope not at all. The only way you can be certainly sure is if the address is posted on somebody's social media page as an "ownership" or if its attached to KYC documents.

I take this as a very qualified opinion on the subject.

From the article:


The difference between what Chainalysis does and what armchair blockchain analysts do is that the results they submit to clients are designed to hold up in court. They are constructed to withstand the scrutiny of any cross-examination.

The US government wouldn't go forward presenting a case if it relied upon analysis that had a chance of containing false positives, as any competent defense attorney could use this "shadow of a doubt" to get the case dismissed or ruled in their favor (meaning it would have been a waste of resources, which believe it or not, is still frowned upon by many departments of the federal government).

There is indeed an "art" to it but it lies in knowing what data or conclusions are relevant to the particular case in hand.

This is interesting as I was not aware of this aspect. I thought that blockchain analytics gave results similar to mathematical certainty, not probabilistic certainty, even if it is 99.9% certainty, which leaves that margin of error down to the 0.1% point.

It seems that the error could be even higher, according to the first article.


This is how I think it should be but we are not talking about condemning alone, we are talking about targeting and passing restrictions, like blacklisting a number of addresses accordingly.

data is only as good as the source

chain-analysis gathers data. but it can only go on the data it gathers. nothing is suggested that the data it gets is correct.
for instance someone could easily scam an exchange using false ID. meaning the exchange registers a withdrawal address as belonging to a false ID victim. so while the scammer is shuffling funds. the ID theft victim becomes the suspect when data is passed from an exchange to chain-analysis.

it is then for the victim/suspect to prove innocence in court. and not chain-analysis to appear in court to prove the victims innocence/exonerate the victim.

very true alot of people think using a service is a "right" when its not. businesses can ban users for any reason. but that business has to allow the customer to leave with their property(for the unwarranted reason). only a court order would allow a business to withhold a customers property. so only if a customer is deemed as doing something suspicious, where the service reports suspicion to the authorities and the authorities then investigate and deem it enough evidence to get a court order to then allow a service to seize funds.
without court order a business can just ban/suspend the customers use of service and offer a withdrawal/refund procedure to exit the service and not return, for even lame reasons like deeming funds are dirty but not evidentially dirty enough to suspect a crime by the customer themselves

Has there been any cases of someone getting convicted with Chainanalysis being the only evidence? Because I think Chainanalysis mostly only helps law enforcement to reinforce the case and lead to stronger evidence, like the illegal goods, laundered money etc.


Private entities have right to reject their customers for whatever reason they want, including Chainanalysis saying that the coins are dirty. That's how capitalism works. You can try to change their mind and tell them how its unscientific, but in the end it's their decision, and you have a freedom to be or not to be their customer.

Why then the software is implemented?
There's no usefulness of that software since it can't retrieve back also lost coin, as I believe that there are two things possible..
A lost coin may either go an active wallet or a dead wallet (inactive) whereby any transaction that occurs between these wallet address can be seen but can't be touched since those addresses doesn't bear bearer names on them and it could be only possible if they sent to exchange address. For Instance, if lost is mistakenly sent to exchange address at this point it's possible to contact the exchange about the funds that was mistakenly sent at this point their software is valuable but doesn't guaranteed a total dependency.

You're wrong.

Such companies track more than what you may think and not only to help an individual ripped off.
It's called data mining. They collect millions stuff.
Big companies like Bitstamp , etoro, and other CEXs are using it. So what do you think they're doing. CEXs provide them a lot of information about their customers trading on their platform.

It's not so different than a data broker.

data mining is such a powerfull industry, people do not realize what can be done with it... against them...

Such softwares used for tracing addresses only instigate stress on a victim that got scammed or lost their coin. A scam victim, who wants to track the address where he/she sent a transaction, needs to bring evidences; chats, photos and money to the agency that claim to trace blockchain transactions. Most victims end up losing more money added to the lost money. Its existence also gave birth to fraudulent agencies claiming to retrieve lost coins or tracking a scammer; with the slogan, a person that fell for scam can easily fall again. The results always appear differently based on the software used to track an address. If the software can't retrieve the lost coin, why depend on unrealistic results, in the name of tracing a person who may not be behind the crime or scam?

Blockchain Analytics is More of an Art Than Science

I am not saying their software is so wrong, but knowing there are false positives, it can be very dangerous.
Even if the false positive rate is only about lets say 0.1%, considering the millions address/transactions being tracked, it can make a lot of dammages.
In example: ""led to unjustified account restrictions and – even worse – land unsuspecting individuals on the radar of law enforcement agencies without probable cause.""

- Hello Chainalysis,
Do you know if your software is accurate?

- I have no scientific evidence for the accuracy.

- Really?

- Really, but clients say so

- Clients, you mean governments lying depending on their agenda?

- Yes




Coindesk, the woke media, didn't like the article talking bad about Chainalysis and decided to remove it
Chainalysis>>>Coindesk>>>DigitalCurrencyGroup
so here it is
https://bitcoinmagazine.com/technical/chainalysis-investigations-lead-is-unaware-of-scientific-evidence
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