"The Eye of the Government" Chainalysis: Most Bitcoin mixed currency transactions are legal transactions

Although the coin service is often considered to be related to “illegal activities”, according to the “eye of the government” Chainalysis analysis, most of the current bitcoin currency transactions are actually used for legitimate purposes.

The blockchain analysis company said in a recent webinar entitled "Cryptographic Currency Types: You Should Know What Important Transactions Are Occurring in the Blockchain", users use mostly rich currency services for privacy reasons. . In contrast, many NET users will send relevant funds directly through the exchange.

“Many people use the coin service for personal privacy purposes,” explains Hannah Curtis, senior product manager for Chainalysis data, at a webinar. “But we know that a lot of illegal money will use the money service.”

Nearly half of the mixed currency transactions come from the exchange

The Chainalysis webinar provides an extensive overview of blockchain use cases, including blockchain analysis for the blender and the dark market, as well as mining pools, ICOs, managed wallets, and ransomware. One potentially surprising conclusion is that Bitcoin hybrid services (both centralized and decentralized versions) appear to be more useful for privacy purposes than for illegal activities.

Specifically, Chainalysis believes that 8.1% of all mixed currency transactions are related to theft, while only 2.7% of the mixed currency transactions are for the dark market. Therefore, less than 1 BTC of every 11 BTC mixed transactions is considered for illegal purposes. In addition, 1.9% of the coins come from gambling sites, which may be illegal under regional regulatory rules.

In contrast, almost half of the mixed currency transactions are issued from exchanges, including traditional exchanges (40%) and peer-to-peer exchanges (7.7%). More than a quarter of the mixed currency transactions come from other mixed currency services.

However, it is worth noting that although only 8.1% of all coin transactions are related to theft, the theft of funds will indeed be mixed.


Decentralized coin service shows explosive growth

Although Chainalysis did not elaborate, it seems that the centralized illegal currency service involves more illegal activities than decentralized hybrid services. For example, Bestmixer, a currency service that was shut down by law enforcement agencies in early 2019, received many sources that may be illegal. It is reported that this mixed-price service involves mixing more than 27,000 BTC.

Chainalysis pointed out that the "decentralized" hybrid service like Wasabi Wallet has experienced explosive growth this year. In the first few months of 2019, the wallet was mixed with about $10 million in bitcoin, and by August 2019, the wallet had grown to around $90 million. According to the analysis of Chainalysis, the Wasabi wallet mixed a total of $250 million in bitcoin in 2019.

( It's worth noting that Chainalysis classifies the Wasabi wallet as a “decentralized” coin service because the user runs the wallet software locally and then mixes the money with each other. But in fact, the hybrid infrastructure of the Wasabi wallet is Centralized, although it does not require trust .)


Image from the Chaininalysis webinar

Although Chainalysis was able to tell which coins were involved in the coin service, this webinar confirmed that they could not track the currency when they were mixed with a coin service such as the Wasabi wallet.

Curtis said:

“We can determine the amount of money invested in the service, including determining what the money service is. A common misconception is that people can track the path of funds through the service.”

In other words, the coin service worked.

More than half of the dark market transactions are sent from the exchange

The Chainalysis webinar also details the cryptocurrency transactions associated with the dark market. The result of the study is that the coins involved are relatively low.

Interestingly, more than half (54.8%) of the transactions related to the dark market are sent directly from regular exchanges. Another 23.5% of the data comes from the peer-to-peer exchange (DEX), while only 0.5% of the dark-net transactions are related to the hybrid service.


The Chaininalysis webinar also highlighted a recent dark market event. The dark market, the Nightmare Market, has become one of the largest dark-net markets in recent months after it experienced a shutdown earlier this year. However, in mid-July 2019, the market suddenly went offline, and some people suspected that it had actually run with money.

According to relevant leak data, there are about 80,000 customers in the market, their preferred payment method is bitcoin, and Monroe is the most popular privacy currency.

When the Nightmare Market was closed, the site hosted cryptocurrencies worth more than $2 million.


According to the analysis, those dark network market providers (and possibly users) that are shut down are rapidly moving to new platforms. Many of the Nightmare Market users come from Dream Market, Wall Street Market and Valhalla, which disappeared after a recent wave of enforcement actions, and users of the Nightmare Market are currently moving to Empire Market, Berlusconi Market, Cryptonia Market and Samsara Market. Dark network platform.

More legitimate bitcoin transactions

Throughout the webinar, Chainalysis also talked about other uses of cryptocurrency, for example, its proven use of bitcoin for terrorist financing has been rising, but did not specify how much it has risen. At the same time, Chainalysis also pointed out that the legitimate use of cryptocurrencies seems to be increasing.

The transaction volume of payment processors such as Bitpay, Flexa, CoinPayments, WebMoney, Coinify and Square has increased significantly in 2019, and the related transaction volume has increased by more than 50% compared with the beginning of the year.