New bitcoin technology Elliptic show banks where Bitcons come from

arrana

Samurai
Press release from: www.businessinsider.com/bitcoin-elliptic-startup-anti-money-laundering-tool-get-banks-interested-cryptocurrency-2015-6?r=UK


New bitcoin technology can tell banks where coins come from with incredible accuracy

Jun. 18, 2015

Elliptic, a bitcoin analytics and storage startup based in London, thinks it's just made a huge breakthrough that could make banks way more interested in bitcoin.

The company has created a sophisticated bit of software that it says can identify where a bitcoin has come from. That's a big deal for banks, which have a legal obligation to find out where the money they hold is coming from to ensure they're not holding proceeds of crime.

Bitcoin isn't untraceable — every transaction is recorded on a public ledger called the blockchain. But the digital wallets that carry out transactions are anonymous, making it extremely difficult to actually make sense of the data. You could do some digging around and make a guess, but it's hard and time-consuming.

That means banks have been wary about holding bitcoin — if they take a bitcoin that's just been earned selling drugs in a dark web market like Silk Road 2.0, or that has passed through a known money-laundering service, they could end up in huge trouble with regulators.

Elliptic says its tool, built by 4 PhD holders, can make a hugely accurate guess as to who each wallet belongs to — and it can do so in real-time. Using machine-learning, its software crunches through the web and dark web, skimming references to wallets and other digital clues to build up a picture of the owner.

Tom Robinson, Elliptic's cofounder, told Business Insider the tool could be a "game changer for the institutionalisation of bitcoin." If banks can satisfy anti-money laundering regulation then they can start to think about handling bitcoin. The tool was created after conversations with dozens of lenders.

Elliptic has today released a visualisation tool showing the flow of bitcoin between entities over the entire six- year history of bitcoin, naming the 250 largest entities where bitcoins are sent to and from.




A visualisation of the flow of money to and from Silk Road 2.0.

Later this year, the company will launch a API of its software, meaning banks will be able to effectively bolt it on to their existing systems and use it. Kevin Beardsley, an analyst at Elliptic, said around five banks have already signed up for the API. (He didn't say which ones.)

In an emailed statement on Thursday, Elliptic's CEO James Smith said “if digital currency is to take its legitimate place in the enterprise it inevitably must step out of the shadows of the dark web. Our technology allows us to trace historic and real-time flow, and represents the tipping point for enterprise adoption of bitcoin.

He added: "We have developed this technology not to incriminate nor to pry; but to support businesses’ anti-money laundering obligations. Compliance officers can finally have peace of mind, knowing that they have performed real, defensible diligence to ascertain that their bitcoin holdings are not derived from the proceeds of crime.”
 

arrana

Samurai
To see how Elliptic works tracking bitcoins go to https://www.elliptic.co/anti-money-laundering/ and click on the question mark. This launches the “Big Bang” that visualizes the transactions.



Then use the explanation (see below) found at https://www.elliptic.co/bigbang-v1.html. Click on any transaction for further information.



The Bitcoin Big Bang

This visualisation shows the emergence over time of the largest entities on the Bitcoin blockchain, and their interconnectivity.

We have anonymised most active businesses and private individuals in order to protect their identities.

The distance from the centre represents the first appearance of each entity, with Satoshi Nakomoto in the middle, depicting the genesis of Bitcoin in 2009.

The colour of an entity represents its type:

White: Creator

Blue: Payment Processor

Lending Service

Mining Pool

Forum User

Exchange

Charity

Wallet Service

Faucet



Red: Dark Marketplace

Tumbler

Scam




Yellow: Gambling Service


Gray: Unidentified


The size of the entity represents the total volume of its bitcoin transactions.

The lines show transactions between entities, with thicker lines indicating higher total transaction volumes.

Select an entity to highlight its major transaction flows.
 
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