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What is blockchain

The blockchain was created to facilitate Bitcoin. A blockchain is a record of historical transactions, similar to a database. The blocks in a chain are similar to the pages of a book. Each page contains the text of the story, the title of the book, the chapter title, and the page number (also known as metadata).

Revolution of blockchain

Blockchain revolution are broken down into three categories:

Blockchain 1.0 is currency, the deployment of cryptocurrencies in applications related to cach, such as currency transfer, remittance, and digital payment.

Blockchain 2.0 is contracts, the entire slate of economic, market, and financal applications using the blockchain that are more extensive than simple cach transactions: stocks, bonds, futures, loans, mortgages, titles, smart properly, and smart contracts.

Blockchain 3.0 is blockchain applications beyond currency, finance, and markets – particularly in the areas of government, health, science, literacy, culture, and art.



Structure of Blockchain

A blockchain, also known as a distributed ledger, stores data in immutable blocks. The key features of a block include its header, which contains metadata such as a block reference number and the time it was created, as well as a reference to the block before it.

The content of a block is typically a list of verified digital assets and instructions, including transactions made, their amoint dates, and the parties’ addresses.


How blockchain works


Money laundering methods using Bitcoins


These are secret organizations that make it hard for governments to enforce their anti-money laundering laws on Bitcoin (reid & harrigan, 2013)

Bitcoin is used to mix funds from different parties, making it difficult to know who owns what or where the money is coming from since it is mixed.

The process is simple: you send your money to an anonymous service, and later receive the same amount back mixed with other people’s bitcoins.

By doing this, the transactions history of each client is hidden, i.e. on the blockchain, making it easier to launder money without being detected.


What is Bitcoin Tumbling?

Bitcoin tumble completely anonymizes Bitcoin, erasing the entire transaction history of the Bitcoin. It works by interrupting the chain of incoming transactions.

Case Study Money Laundering

The largest amounts of bitcoin were laundered consistently through conversion services located in jurisdictions that were not identified.
In the jurisdictions that were identified, the largest amounts of illegal bitcoins were laundered through European conversion services.
There was relatively little activity in conversion services based in Africa.


Case Study Money Laundering

Ruling of the Provincial Court of Asturias (6 February 2015) refers to a dispute between a Company called Meetpays S.L., which provides services to purchase bitcoins directly, and a Credit Company known as CajaLaboral, popularly known as Cooperete deCredito. Both companies have signed a contract to install a POS (Point of Sale) system in the Asturias area.


The ruling states that Meetpays sued CajaLaboral for breach of contract, arguing that this service could be used to pay for goods and services around the world with bitcoins, free and anonymous, from any computer or mobile phone, making it impossible to verify the legality and origin of funds in an activity of “high risk” as the competent authorities would be “preoccupied” with this coin, which could potentially be used for laundering drug trafficking and other illegal activities.

Monitoring the BlockChain Network


BlockChain Monitoring Tools

Blockchain explorers are useful to Bitcoin users as they help identify all the transactions that take place since the inception of the cryptocurrency;s distributed ledger

In the early days there were only a few Blockchain explorers in existance but now there’s a lot as the Bitcoin enviroment has grown.


Trade Block





Source: Amit Sharma

BlockChain Monitoring Tool

Blockchain otherwise known as is one of the oldest blochchain explorers to date

Using blockchain’s website users can enter a bitcoin address to view its contens, transactions identifiers, adn more to get visibility to all the transactions within the network

Blockchain will give you information on the free paid per transaction, the block height the transaction was included in, how many confirmations took place and more


Source: Amit Sharma


OXT (open exploration tool)

Another interesting block explorer is OXT, which stands for “open exploration tool”. OXT is an exploratory block analysis tool. Just like any other block explorer, OXT can show you what is going on in the Bitcoin network.

On the OXT website, you can also see different types of transactions happening in the Bitcoin blockchain.

The OXT website also provides charts and plotting tools to help you understand the behavior of the Bitcoin blockchain. You can see time charts related to fees, transaction, script and more.

You can also use scatter plots to get a different view of transactions and Bitcoin address behavior.


Source: Amit Sharma

Traceability of Bitcoin

Bitcoin transactions are traceable, which means we can trace any Bitcoin activity. However, there are limits to this. For example, if people are mixing or agreeing to build joint transactions, it may be hard to trace where the coins come from. However, this is already information.

To improve security, we can avoid working with people who are either “suspicious” or very hard to trace.

We can group addresses into entities (clusters) based on the way we build  transactions inputs, outputs and amounts. This way, we know that a single person or company owns several addresses.


Technology to Track Block chain

Companies like Chainanalysis use techniques like blockchain sudits to track specific transactions across the blockchain.

Bitfury, a major Bitcoin mining company, has released a new technology that allows it to track transactions more efficiently. It uses a technique called transaction clustering (also known as automatic Bitcoin address grouping).


How Authorities Track Bitcoin Related Crime

  • In the past, this “trace-ability” of Bitcoin has led to the downfall of many people. They may attempt to hide where the money is going, but there are companies like chain analysis that can help them trace where the money goes.

    For example, in the recent Silk Road case, special agent Carl Force, who stole the Bitcoin, attempted to hide the money he wanted to make money from.


"BlockSci" Analytics from


"BlockSci" Analytics from


"Bitlodine Framework" Intelligence from Bitcoin Network from Polimi University, Italy


Case Study 1 – Trace Bitcoin


Case Study 2 – Trace Bitcoin


Exploiting the Bitcoin Network

The Bitcoin blockchain is a key vulnerability for the bonet, according to Interpol, which has warned that it can be used as a delivery system for malware and other illegal content. In a demonstration at Black Hat Asia, researcher Vitaliy Kamluk showed how malicious payloads could be inserted into the blockchain, where they could be retrieved from remote machines by malware.

Researchers have also demonstrated that the Bitcoin peer-to-peer (P2P) network can act as a dependable, low latency C&C infrastructure to run botnets.

In current botnets, the C&C command from the botmaster is usually delivered to bots through IRC networks, P2P custom protocols, or HTTP sites. This allows security researchers and law enforcement to identify the botmaster, and disrupt the botnet’s communication channels.

Virtual Currencies: New Challenges

Bitcoin is losing popularity among criminals due to its lack of privacy. Criminals are aware that it can be monitored by “Chainanalysis”. These tools detect anomalies such as money laundering, crime sources, alerts exchanges and LEAs’s, and helps prevent conversion into traditional Cash.
The emergence of Privacy coins like monero


Exploiting the Bitcoin Network


Challenges & Solutions

Previous Analytics solutions fails miserably due to privacy preserving Crypto Cashes

New research is coming up, but partial success (Princeton university research on Zcach [BlockSci])

Still Monero is difficult to track as of now. Combine that with Darkweb/ ToR becomes Next to Impossible