Glossary

Chain Analysis

1 min read

Chain analysis uses heuristics to analyse the blockchain and trace the ownership of bitcoin across transactions. Several companies exist solely to track and deanonymize individuals and their bitcoin using these heuristics. These companies sell their analysis to financial institutions and governments who are attempting to prevent fraud, money laundering, and other illegal activities. Chain analysis is a broad term, and should not be confused with the company called Chainalysis.

Related Terms
Blockchain
A blockchain is a chronological list of records, called blocks. Each of these blocks contains transactions. Once a block is added to the blockchain, it is infeasible to alter, giving Bitcoin its immutability.
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Know Your Customer (KYC)
Know Your Customer Laws, Anti-Money Laundering, and Counter-Terrorism Financing Laws are all intended to combat illicit money transfers by mandating that all bank accounts be identifiable to individuals or organizations.
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Anti-Money Laundering (AML)
Anti-Money Laundering (AML) is a category of laws and regulations that are intended to prevent money laundering, terrorist financing, tax evasion, and other illicit activities.
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CoinJoin
CoinJoin transactions provide increased privacy for users by breaking the heuristics used by chain analysis companies. A CoinJoin transaction combines inputs from several users and returns to each user the exact same amount, making it difficult to track users and their coins.
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