Inspecting Crypto: Make the Most out of a Blockchain Explorer

Blockchain ledgers contain hundreds of gigabytes of unreadable information. To make it easy to understand and interpret, there are block explorers (often referred to as ‘blockchain explorers’ or ‘wallet explorers’).

A block explorer is needed for understanding a network’s performance. It lists the chain’s most recent blocks, transactions in given blocks, current and historic balance, the age and height of a specific block and other useful data. Below, you will find some popular applications of blockchain explorers for examining blocks, addresses or transactions.

Blockchain Explorers for Analyzing Addresses

Blockchain explorers are a precious source of information about a specific address, be it your own wallet or the wallet of a suspicious cryptocurrency exchange. Instead of logging in to an application to check your balance or transactions, you can simply type the address in the search bar of a block explorer.

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This will tell you nearly everything you need to know about the address, including:

  • Wallet balance & its USD equivalent
  • Which tokens are held and in which proportion
  • Transactions hash and values

Exploring addresses can also provide information about the nature of an address.

If an address is regularly receiving and sending funds from/to multiple sources, this may mean that it is either an exchange or a tumbling service used for hiding the origin of the funds.

You can also use a block explorer to analyze the full list of transactions associated with the address. If some dates or amounts coincide with those of another wallet, this can reveal their interrelation.

An example of how blockchain explorers reveal address relationships is the case study of 6 Ethereum wallets accused of faking decentralization. The interconnections were revealed based on the coincidence of the dates and volumes of the transactions.

Analyzing Transactions with Blockchain Explorers

Blockchain transactions are easy to trace in case of public ledgers such as Bitcoin or Ethereum. Block explorers normally update in real-time the major details of every transaction, including:

  • TxHash — transaction ID used in search
  • TxReceipt Status — confirmation of the status of the transaction
  • Block Height — the number of the block in which the transaction took place
  • Time Stamp — the exact time when the block containing the transaction was mined
  • From / To — addresses of the sender and the recipient
  • Value — the amount sent and its dollar equivalent
  • Actual Tx Cost / Fee — the actual cost of the transaction

Using this data, you can find a lot of useful information. For instance, from/to addresses and amounts can show clear affiliation between different wallets, and they are crucial for grouping (‘clustering’) together addresses belonging to the same person or entity. In theory, you can trace the whole history of transactions until you reach the original account holder — unless the chain was interrupted by a tumbler exchange.

A good example of what transaction analysis can uncover is the QuadrigaCX investigation. This blockchain investigation proved that the notorious exchange had been using other exchanges to externalize its funds and cover withdrawal requests, which is a typical sign of a Ponzi scheme.

Crypto Investigations: What Blockchain Explorers Can Tell

Block explorers serve as open-source intelligence tools for investigating cases of cryptocurrency fraud and other illicit activities. As a rule, such research consists of the following steps:

1. Collect source data and arrange it into a timeline of events, indicating subjects, locations and motives where possible.

2. Analyze addresses and transactions to identify where the money ended up and what tactics were used to conceal it (cluster wallets, mixer services, etc.).

3. Use open source intelligence tools (search engines, news articles, social media analytics, etc.) to identify the holder of the illegally appropriated funds or other missing information in the case.

As you can see, block explorers are an indispensable tool for tracing the flow of money.

You can find a more detailed guide in How to Investigate a Crypto Crime: a Simple Step-by-Step Guide.

Key Takeaways

To summarize, blockchain explorers are simple yet powerful open-source tools with a wide scope of applications. With their help, you can quickly check your wallet’s balance, decide on the trustworthiness of a cryptocurrency, investigate cases of fraud and more. Combined with the transparency of public blockchain ledgers, these open-access tools further ensure fair standards in cryptocurrency operations.

Inspecting Crypto: Make the Most out of a Blockchain Explorer was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.