Cybercriminals like hackers have constantly targeted cryptocurrency users, including service providers, investors, and individuals. Such attacks have increased over the recent years, contributing to massive losses worth billions in Bitcoin. That has prompted the Bitcoin network to revamp its protection measures to secure users’ data.
Many Bitcoin-based businesses have also enhanced their security provisions, using sophisticated technologies and tools. For instance, leading crypto exchange websites such as bitcoin-pro.live offer guidelines to enable their customers to mitigate the recovery of stolen virtual assets. However, even such measures have not stopped hackers from stealing Bitcoin.
Most people believe it is impossible to track stolen crypto, but new ways have emerged to turn the tide. Forensics investigators are becoming savvier and can now figure out people’s identities behind specific Bitcoin accounts despite anonymity. The authorities have recently made successful attempts at recovering stolen crypto funds in some high-profile cases, indicating the possibility of tracking hacked Bitcoin.
Ways of Tracking Stolen Bitcoin
The recovery of stolen Bitcoin has long been a theoretical approach, but innovators and law enforcement agencies have discovered various practical ways of doing it. The following are some of those alternatives.
The increasing crypto heist cases have created an opportunity for tech-savvy companies to profit from helping people track stolen virtual assets. Bitcoin and other cryptocurrencies primarily rely on blockchain, which validates transaction data in a shared public ledger. However, the blockchain provides limited user data since users can also transact anonymously. That allows criminals to mask their identities and assets by quickly spreading them across multiple virtual wallets.
Blockchain surveillance companies leverage the irreversibility of transactions, using software to scrape transactional data on the network. They can also use those tools to analyze the data for suspicious activities such as theft, enabling them to track down where the funds ended up.
All crypto transactions must have links to at least one public address. Thus, blockchain surveillance firms can use that information to unmask the identities of those behind them, flag other transactions that they made, and identify the exchanges and wallets they use.
Investigators use sophisticated software to analyze the flow of cryptocurrencies, successfully tracking down hackers and the stolen funds. A New York-based blockchain search engine firm, Bitquery, provides an analytical tool that extracts and synthesizes data from the blockchain, then stores the information on their database where customers can access it.
They begin by spotting all the transactions related to the affected Bitcoin address and generate graphs showing the currency’s movements to and from the account. That enables them to identify patterns that could offer the other payment services or exchange platforms the hackers use.
Proof-of-Concept Software Tool
Cybersecurity researchers at Cambridge University recently discovered an 1816 idea that could significantly transform the tracking of stolen Bitcoin. The idea emphasizes redefining what constitutes a tainted Bitcoin. Their coded proof-of-concept software tool can scan the blockchain and identify the locations of stolen Bitcoins even if hackers move them across several wallets for many years.
The tool allows them to see through the build-up of algorithms that hackers often use to hide the origins of their Bitcoin transactions. There is no doubt stolen Bitcoin will eventually end up in someone’s wallet. They leverage that to keep track of stolen Bitcoin, following the money to the specific wallet where the thief moved it. However, implementing the technique would require its adoption by the authorities that make the regulations about what constitutes tainted or dirty crypto.
Bitcoin theft is becoming rampant today, impacting fears among established and new crypto enthusiasts. However, innovators and government agencies would soon prevent such threats with practical solutions for tracking stolen virtual assets, as discussed above.