July 22, 2020 / Beginners

Chainalysis Review: Fighters For Honesty or Anonimity Killers

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Chainalysis has grown from a small startup into one of the most influential analytical services in the blockchain sector. At the same time, the developed by project tools have changed the perception of cryptocurrencies and blockchain in general.

Therefore, in July 2019, Forbes called Chainalysis one of the most promising startups and the future “unicorn” of the industry. At the moment, there are about 25 divisions of the company registered in the USA, Europe, and Singapore. And the client list includes major banks, cryptocurrency exchanges, and governments.

In April 2020, Chainalysis announced a partnership with software developers, cryptocurrency wallets, banking specialists, and others.

The last expansion of the company’s functionality was announced in early June. Then Chainalysis added the ability to track Dash and Zcash transactions to Reactor.

Chainalysis Products

You can find information about three products of the company on the official website. Among the products provide to the government and private companies are:

KYT (Know Your Transaction) is an interface that allows you to track the security rating of a transaction in real-time. The team also provides an API that can automatically block suspicious transfers and export transaction logs for reporting. The tool is primarily focused on exchanges.

Reactor is Chainalysis’s first and perhaps most popular product. It is a tool for “investigation”, that allows you to link cryptocurrency transactions with real persons and activities, track the chain of transactions, etc. Reactor automatically generates address identifiers by analyzing all information available on the network into the transaction history, forums, and platforms where the wallet is mentioned. It is Reactor that is mainly purchased by government agencies.

Kryptos is a service that allows using the KYC base and tracking activity on the blockchain to determine the trust rating for a particular cryptocurrency company. According to Chainalysis, there are more than 1,800 enterprises in the database, and their product will help you quickly decide whether it is worth doing business with this or that counterparty and whether it is noticed in risky operations.

Integrity Fighter Or Anonymity Killer?

The official website of Chainalysis states that they are fighting for transparency, uniform auditing standards, and fairness among cryptocurrencies. And only this will help the blockchain to gain mass distribution and trust from people.

But in the community, the reputation of Chainalysis is not so rosy – analysts are known not so much for research reports, as for their cooperation with the governments of different countries.

The Inside That Exists No Longer

In July 2019, the user with the nickname Chainalysis1 published a thread on Reddit, in which he announced that he was an employee of the company. In the comments of the topic, a whole conversation began, during which the analyst told a lot of interesting things about Chainalysis methods. After 12 hours, the topic was deleted, and the comments were “cleared” even from the Reddit archive. However, an archive copy of the page with almost complete content has been saved here.

To understand why Chainalysis hastened to close this topic, here are some quotes from the comments:

chainalysis

The information is well worth checking out and includes snippets of how Chainalysis works and how to counter tracking. And although the theme was created a year ago, and the company’s analytical tool was supposed to be updated, it is unlikely that Chainalysis made a qualitative leap that would allow tracking mixers and revealing IP hidden behind Electrum nodes.

From the above, it can be seen that Chainalysis chose a very difficult niche. And so far, there is a clear bias of the company towards regulators, not the community.

Note, that Chainalysis is still growing, and if Forbes predictions come true, it could become one of the largest companies in the industry, and also a kind of private crypto-police, which will decide whether you have a reliable wallet or not.

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