"Currently, bitcoin users can have multiple addresses, making it easier to conceal identities and commit crimes on the Blockchain. The ability to link related addresses, called 'clustering,' is an important new tool that helps law enforcement agencies conduct criminal investigations," said Valery Vavilov, CEO of The Bitfury Group.
Bitcoin address clustering is a process that exposes bitcoin users by determining which addresses belong to a single user through an analysis of Blockchain data. The act of clustering groups those addresses together, enabling investigators to link them to a single entity.
In a new report, Bitfury reveals a comprehensive approach to clustering that reduces errors in results. While prior algorithms constructed clustering models using Blockchain information and validated it with off-chain data, such as public information on the Internet, Bitfury’s new method uses both data types during the model construction step. The proposed approach allows investigators to reduce errors in unreliable input data sources and achieve a higher level of accuracy.
To see the algorithms developed by the Bitfury team, read the full white paper here