Tracing Cryptocurrency Flows Across Separate Blockchains

Summary

This paper asks whether cryptocurrency transactions can be linked across separate blockchain ledgers, extending the study of tracing activity within a single currency. It focuses on exchange services that convert one cryptocurrency into another, which can create a bridge between otherwise distinct transaction histories. The work develops heuristics for identifying cross-ledger links and examines patterns in cross-currency exchange activity.

Its evidence combines activity data collected from ShapeShift over thirteen months with information from eight blockchains. The authors use these data to study platform usage and consider whether the services are associated with criminal activity or profit-seeking behavior. The supplied description does not report the specific linking rules, measured patterns, or conclusions about user identities and motives. Because blockchain visibility does not itself establish who controls an address, inferred links and interpretations of intent should be treated as uncertain.

Key ideas

• Cross-currency exchange services can provide a path for tracking funds between distinct blockchain ledgers.
• The study develops heuristics to create links across cryptocurrency transaction records.
• Its analysis draws on ShapeShift activity and data from eight blockchains over a thirteen-month period.
• The research examines exchange patterns and platform use, including possible criminal or profit-driven motivations.

Tags

# Tracing Transactions Across Cryptocurrency Ledgers


# Tracing Transactions Across Cryptocurrency Ledgers









One of the defining features of a cryptocurrency is that its ledger, containing all transactions that have evertaken place, is globally visible. As one consequenceof this degree of transparency, a long line of recent re-search has demonstrated that even in cryptocurrenciesthat are specifically designed to improve anonymity it is often possible to track money as it changes hands,and in some cases to de-anonymize users entirely. With the recent proliferation of alternative cryptocurrencies, however, it becomes relevant to ask not only whether ornot money can be traced as it moves within the ledgerof a single cryptocurrency, but if it can in fact be tracedas it moves across ledgers. This is especially pertinent given the rise in popularity of automated trading platforms such as ShapeShift, which make it effortless to carry out such cross-currency trades. In this paper, weuse data scraped from ShapeShift over a thirteen-monthperiod and the data from eight different blockchains to explore this question. Beyond developing new heuristics and creating new types of links across cryptocurrency ledgers, we also identify various patterns of cross-currency trades and of the general usage of these platforms, with the ultimate goal of understanding whetherthey serve a criminal or a profit-driven agenda.

Shown in full with attribution under the source's licence. Licence: abstract CC0

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.