Cryptocurrency Address Clustering and Labeling
This addresses the challenge of anonymity in blockchain for law enforcement and compliance, but it appears incremental as it builds on existing clustering methods without claiming major breakthroughs.
The paper tackles the problem of identifying real identities behind anonymous cryptocurrency addresses by clustering them based on ownership patterns and assigning labels, which can aid in legal and compliance efforts such as law enforcement investigations.
Anonymity is one of the most important qualities of blockchain technology. For example, one can simply create a bitcoin address to send and receive funds without providing KYC to any authority. In general, the real identity behind cryptocurrency addresses is not known, however, some addresses can be clustered according to their ownership by analyzing behavioral patterns, allowing those with known attribution to be assigned labels. These labels may be further used for legal and compliance purposes to assist in law enforcement investigations. In this document, we discuss our methodology behind assigning attribution labels to cryptocurrency addresses.