How to Track Transactions on The Bitcoin Network?

When transactions need to be kept track of quickly or on a regular basis, it’s not efficient to look at the data by hand. In this case, researchers use commercial solutions that add a layer of extra information on top of publicly available data, showing who interacts with whom on the network. Let’s look at the ones that are most often used.

What Can a User Track?

Many block explorers of the bitcoin blockchain offer the easiest ways to keep track of transactions. Most of the time, they are used to making sure that the operation went well and didn’t leave anything up in the air.

At the same time, anyone can become a bit of a detective and use these online platforms to find out about past transactions made with a certain bitcoin address, its current balance, the amounts that have been sent through it, or lists of addresses for incoming (input) and outgoing (output) operations. In the search bar of the block explorer, you can type in the transaction ID (TXID, TxHash), the address, the hash, or the height of the block, and you’ll know right away what their status is.

Block Explorer or Blockchain.com have tools that can help you get started. The OXT, Token View, Blockcypher, Insight, Sochain, and Blockstream Bitcoin Explorer services also show similar information, but they do so in different ways. With the help of Cryptocurrency Alerting, you can set up alerts about activity from an address of interest, and the Blockseer tool will let you “follow bitcoin” by showing you the links between the addresses involved in the transactions.

How do bitcoin addresses look on the network?

Bitcoin addresses are made up of a string of Latin letters and numbers and don’t show who owns them. This gives users the false impression that they are completely anonymous. But Bitcoin transactions are recorded without encryption, which means that they can be tracked.

Much depends on how the address is used and what traces are left on the network when it is used. For example, it’s pretty easy to track down transactions for a bitcoin address whose owner puts it in their email signature or on a forum.

And if it were made on a separate system that connected to the Internet through the anonymous TOR network and got bitcoins only from a mining pool like Eligius, which doesn’t need you to sign up to get started, the job would be much harder. But you can get close to the owner of bitcoins if you use serious analytical tools and spend some time and money.

Popular Services

Chainalysis

Chainalysis, an American blockchain analytics startup, is probably the most well-known company in the field of tracking Bitcoin. Since 2015, he has been helping the US Internal Revenue Service (IRS) find people who don’t pay their taxes using cryptocurrency. The company works with Europol, different countries’ law enforcement agencies, and cryptocurrency exchanges.

Crystal

Bitfury Group, one of the biggest developers and providers of blockchain solutions in the world, gave financial institutions and law enforcement agencies the Crystal tool in January 2018. This tool was made specifically for investigating bitcoin.

Elliptical

Elliptic, a blockchain analytics company based in London and founded in 2013, used to be a cold wallet for storing private keys to bitcoin addresses. After that, it switched its focus to helping cryptocurrency exchanges and financial services fight the laundering of illegally obtained funds.

Is There a Way to Avoid Being Tracked?

Given that bitcoin is “pseudo-anonymous,” it’s important to remember that anti-tracking measures are only somewhat effective. Even the popular CoinJoin, which combines several transfers from different users into one transaction with a lot of outputs and does not require sending bitcoins to a third-party service, does not guarantee complete anonymity. After all, inputs and outputs will still be shown in the network, and transactions can be found using the coinjoinsudoku toolkit.Still, you shouldn’t skip these steps if you don’t want to be an easy target for crypto scammers. For example, you can sometimes make a new address for each new transaction or counterparty, stop sending private transactions through cryptocurrency exchange accounts, and use open source wallets.