AI Enhances Blockchain Analytics to Combat Money Laundering
Law enforcement agencies can benefit from the rapid scanning capabilities of artificial intelligence (AI) to detect suspicious activities on the Bitcoin blockchain, as detailed in a recent report by blockchain analysis firm Elliptic. Elliptic collaborated with the MIT-IBM Watson AI Lab to leverage deep learning models in analyzing Bitcoin transactions for signs of money laundering and identifying wallets associated with illicit activities.
The Potential of AI in Blockchain Analysis
- AI-powered deep learning model used to detect money laundering patterns
- Separating legal and illicit transactions with AI technology
Through the utilization of AI, Elliptic was able to segregate both legal and illicit transactions, allowing for the identification of potential money laundering schemes. The decentralized nature of the Bitcoin public ledger facilitated this study, enabling AI to analyze vast amounts of transaction data efficiently.
Machine Learning Techniques and Bitcoin Transactions
- Machine learning algorithms applied thanks to transaction and entity data availability
- Contrast with traditional finance and siloed transaction data
Elliptic highlighted the advantages of blockchain technology in providing transaction data and entity information necessary for machine learning applications. This contrasts with traditional financial systems where transaction data is often isolated, limiting the application of machine learning techniques.
Challenges with Privacy Coins
- AI test not conducted with privacy-focused cryptocurrencies
- Privacy coins like Monero present unique challenges for transaction analysis
The study did not include privacy coins due to the lack of counterparty information available in their transactions. However, Ellipticโs co-founder emphasized the potential applicability of AI techniques to other open blockchains like Solana and Ethereum.
Hot Take: AI Revolutionizes Blockchain Analytics
AI-driven analytics offer a powerful tool in combating money laundering on the blockchain, enhancing law enforcementโs capabilities to detect and prevent financial crimes effectively.
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Sources:
โ [Elliptic Report](https://www.elliptic.co/blog/our-new-research-enhancing-blockchain-analytics-through-ai?utm_content=291576989&utm_medium=social&utm_source=twitter&hss_channel=tw-1344645140)
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