The appeal of using bitcoin as a cryptocurrency has been mostly rooted in the blockchain, which is a sequential key or database attached to each transaction. It is seen as the main technological feature of bitcoin transactions, as each block is added in a linear fashion to the record of every exchange.
Just recently, a new company called Chainanalysis is claiming to provide financial institutions access to blockchain information, which might have repercussions on the anonymity and security of bitcoin usage. According to its website, the company will provide customers with access to an API that will enable them to identify which entity the transaction came from. With that, customers can be able to decide if they want to do business with the entity or not, depending on its reputation.
Implications for Bitcoin
In providing financial institutions the means to obtain regulatory compliance through real-time analysis of the blockchain, Chainanalysis plans to automate the travel rule in ensuring that its customers know who they are transacting with. The company makes use of sophisticated in-depth transaction analysis on the blockchain, hence the name Chainanalysis.
Apart from that, the company also offers its customers a web interface that would allow them to trace and investigate the transaction routes with ease. Through this, they can also be able to have a private annotation of entities and generate reports from the transactions.
It will be interesting how the bitcoin industry and its enthusiasts will take these services, as these could expose numerous transactions that would rather be kept confidential and secure. On the other hand, regulatory agencies might be more welcoming to this development, as this could increase their oversight on the industry and its activities.
But with bitcoin transactions likely to enjoy a lower degree of anonymity, the cryptocurrency might stand to lose its appeal and value. The company is based in Schindelle, Switzerland and any significant updates on their operations could have an impact on bitcoin prices.
Image from Chainalysis