Crypto intelligence is one branch of the industry that aims to bring a greater degree of insight and transparency to a space that’s built on anonymity and water-tight user privacy.
Companies offering crypto intelligence products, such as blockchain analysis tools, market research services, and specialized consultancy, set out to gather analysis and insight on cryptocurrencies, their underlying blockchain technology, and the users who adopt them.
The ultimate objective for crypto intelligence is simple: to give every crypto user visibility to data and insight so they can make informed decisions. This data and the decisions drawn from them could help fight fraud, lower barriers to adoption, find new projects, and trade more effectively.
However, for all the undeniable advantages brought by crypto intelligence, a delicate balance exists between providing analysis and protecting privacy.
One company driving innovation in crypto intelligence is Texas-based startup Arkham Intelligence. According to its whitepaper, the organization provides a platform that “systematically analyzes and deanonymizes blockchain transactions, showing users the people and companies behind blockchain activity”. In July 2023, the company grew with the launch of the first on-chain intelligence marketplace where users can buy and sell intel related to specific crypto wallet addresses.
Here, we explore Arkham Intelligence’s offering and where it fits into the crypto sphere.
Arkham’s integration with major crypto projects
Arkham’s vision is for a crypto intelligence platform that provides total coverage of the blockchain, serves multiple use cases, and is affordable for users. To help realize this vision, Arkham has formed major strategic partnerships with big-name players in the space to broaden its coverage across the Ethereum blockchain and beyond.
Broader coverage should — in theory — mean more data, deeper analysis, and better outcomes for all users. Some of Arkham’s strategic partnerships to date include:
Base
In early 2023, Arkham Intelligence added support for Base — a layer 2 solution incubated by Coinbase that sits on top of the main Ethereum network to support scalability. Arkham’s offering provides Base’s users with access to on-chain analysis to help inform their decision making. Today, more than 100 decentralized applications (DApps) and services providers are part of the Base ecosystem.
BNB Chain
February 2023 saw the news that BNB Chain, a distributed blockchain network for building Web3 DApps upon, would be integrated with Arkham Intelligence. The move expands Arkham’s product coverage to a large portion of the smart-contract space, allowing users to track entity transactions, monitor asset flow across chains, and review aggregate analysis.
Polygon
Arkham provides access to data on the Polygon network, allowing users to track, monitor, and identify wallets and entities in the Polygon ecosystem and Ethereum-based worlds. Polygon supports the NFT efforts of entertainment giant Disney, and has partnered with Starbucks to support the coffeehouse corporation’s blockchain activities. Arkham’s Polygon collaboration therefore provides fresh opportunity for users to analyze activities across a broad stroke of Web3 applications.
Optimism
Optimism’s own rollup ecosystem has also been integrated with Arkham, adding further multichain opportunities to users to complement those from Polygon, BNB Chain, Avalanche, and Tron. Optimism has grown rapidly since 2022 and is the first optimistic rollup to help bring scalability to Ethereum.
Arkham and the growth of crypto analytics
Crypto analytics is a close sibling of crypto intelligence. Where crypto intelligence looks broadly at quantitative and qualitative factors, analytics has a tighter focus on gathering the vast swathes of data generated by crypto activities and turning it into something useful. Given how volatile the market is, any tools that empower users with insight, monitoring, and analysis for managing uncertainty could prove valuable to many market players.
Crypto analytics equip users with qualitative data on trading volume, market trends, price action, and various blockchain metrics. This intelligence not only helps users to make smarter trades, it can also help detect corruption, and supports self-regulation.
Arkham’s AI-powered capabilities
Arkham Intelligence’s tools are a piece of the crypto analytics puzzle. The organization has developed a proprietary AI-powered algorithmic address matching engine called Ultra to draw out intelligence from today’s vast web of activity. The technology curates on and off-chain data from multiple sources (and multiple chains) and links blockchain addresses to real-world entities, providing a complete picture of entities that use crypto and their activities.
Profiler is the core platform underpinning Arkham’s offering . With it, users gain a comprehensive real-time overview of an entity or an addresses’ activity, including:
Transaction history
Portfolio holdings
Balance history
Profit and loss
Exchange use
Top counterparties
Meanwhile, filtering allows users to sort and navigate results based on specific metrics, simplifying the task of finding the data one needs.
About Arkham Intel Exchange
Arkham’s Intel Exchange adds another dimension to crypto analytics and Arkham’s product suite. The exchange connects those who wish to buy and sell crypto intelligence, allowing buyers to set bounties for information they’re seeking and enabling sellers — including crypto sleuths — to auction off their intelligence. Powering the exchange is Arkham’s native token, ARKM, which users can trade for information such as entity labels, hacker tracking, and curated data feeds.
Real-world use cases
Arkham’s analytical products have played a notable role in addressing past high-profile crypto incidents.
Recovery of assets for Alameda Research
As Bitcoin Magazine reports, Arkham Intelligence found that liquidators tasked with recovering assets following the collapse of hedge fund Alameda Research had gained control of 34.94 Bitcoin (BTC), worth roughly $110 million at the time. The Arkham report showed that multiple wallets had been receiving BTC from exchanges and cold wallets as recently as March 2023.
Euler hacker’s gradual return of funds
In April 2023, as Coin Desk reports, Arkham Intelligence was able to track the gradual return of around $200 million stolen by a hacker from lending protocol Euler Finance. The analytics showed a combination of dai (DAI), wrapped Bitcoin (wBTC), staked ether (sETH), and USD coin (USDC) had been taken in the exploit. Arkham’s analysis was applied to monitor the return of the funds in batches, as Euler and the hacker negotiated for a resolution.
Concerns over Arkham's technology
Crypto media has reported concerns and skepticism over the risk of misuse of Arkham’s platform. Much of these concerns center on the potential for smear campaigns and doxing of innocent people, using the organization’s intelligence marketplace.
Meanwhile, concerns have been raised about the referral URLs users can share to invite others to the exchange. Although each URL appears to contain a random sequence of letters and numbers, each can easily be decoded to reveal the user’s email address.
Arkham had launched a service to reveal the identities of digital wallet owners, which provoked a backlash from privacy-centric crypto advocates. To make matters worse, unbeknownst to wallet owners, the Referral URL had been exposing their email addresses for months, which confirmed the doxxing concerns. The exact number of affected users remains unclear, but anyone who generated and shared a referral link might have unintentionally disclosed their email address.
Miguel Morel, the Chief Executive Officer, accepted that there had been a mistake in the beta stage designed to spot and reward users who referred others. Morel added that a code alteration was made to securely encrypt users' emails and prevent reverse engineering. This aligns with Arkham's aim to expose any bad actors in the crypto space.
Also reported by Coin Desk, other critics have suggested that a transparent blockchain, which Arkham’s platform helps to create, can potentially open the door to surveillance — undermining the privacy that underpins crypto at large.
What’s more, Arkham Intelligence came under scrutiny in April 2023 after reports that an alert sent out by the company in error caused the price of BTC to drop by 7% in just one hour. Arkham’s platform had allegedly alerted users that wallets linked to Mt. Gox and the U.S. Government had begun moving large sums of BTC. Arkham later took to X, then Twitter, to share its own data, showing the alerts weren’t in fact sent in error.
The balance — and sometimes conflict — between transparency and anonymity in crypto requires careful management. The immutability of information on a blockchain and the ability to see transactions from public addresses is a form of transparency the majority of crypto users value.
Maintaining transparency in the interest of protecting users, but without placing their privacy at risk, is a key challenge parts of the industry and players like Arkham Intelligence are grappling with.
The future of crypto intelligence?
In its whitepaper, Arkham estimates the crypto intelligence economy will swell to reach more than $30 billion annually — matching, if not surpassing, the current market size for conventional financial data.
If it happens, the widespread global adoption of crypto could be a driving force for growth in crypto intelligence as new tools are needed to keep pace with the new financial system. Artificial Intelligence (AI) could help accelerate this growth, with automation unlocking fresh opportunities for crypto data analysis at unprecedented speed and scale.
As an early adopter of crypto intelligence technology and an innovator in the space, Arkham could stand to benefit from growth of the crypto intelligence space, building on its experience while new entrants carve out their market position.
If global crypto adoption does occur, intelligence could emerge as a force for competitive advantage. Users can be empowered with increasingly sophisticated and inventive insight tools, helping them make smarter decisions on trading entry and exit, asset choice, identifying patterns, and more. Meanwhile, exchanges and other platforms could more deeply integrate crypto intelligence into their features, using it as a tactic to attract traders with a more compelling offering.
Exploring growth through the lens of cybersecurity, many would argue that mass crypto adoption will bring with it greater demand for rock-solid security. Naturally, new applications of crypto intelligence can support better security for all if transparency is used as a deterrent for malicious acts.
The final word
Crypto intelligence in its various forms helps to bring greater transparency to the industry, providing all users with visibility into the movements of wallets and the actions of their peers.
Given the importance of privacy to the crypto space, Arkham’s crypto intelligence platform and ambitions to deanonymize blockchain have been thrust into the spotlight as commentators debate the delicate balance between transparency and privacy.
These debates will continue, but as Arkham’s user base surpasses 100,000, crypto intelligence could continue to grow and evolve as another tool for traders, developers, exchanges, and all other market participants to make smarter decisions.
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