Perspectives

The currency of disruption

Finding hidden Bitcoin value with analytics

By speeding transactions and allowing for the near-anonymity of its users, Bitcoin has emerged as a de-facto cryptocurrency. But analytics can help mine additional value from Bitcoin by identifying patterns and unearthing unethical or illegal activity.

“Cryptocurrencies are not limited to transactions as simply monetary instruments; their positioning as assets may allow them to be used in larger swap or derivative transactions as an underlying asset.”

Can analytics mine transaction gold from cryptocurrencies like Bitcoin?

Barter and non-cash transactions are as old as humanity itself. From the exchange of goods in the agora of ancient Greece to the use of wampum shell beads by Native Americans, history is ripe with examples of hand-to-hand currency exchange.

Bitcoin is the digital equivalent of yesteryear's marketplace transactions. The first cryptocurrency to take hold, Bitcoin became the digital payment darling of gamers and hackers in 2009 largely because of the inherent anonymity of its users.

According to Bitcoin and Analytics, part of Bitcoin’s wide appeal is that it allows users to conduct transactions in near anonymity and invisibility. Current Bitcoin users are participating in an evolving and rapidly growing payment ecosystem of trading platforms, payment processors, e-wallets, and more, with increasing investment appeal.

Along with the anonymity advantage, Bitcoin is touted for both the speed and low (or no) cost of transactions. In addition, the public block chain protects Bitcoin users from double payments and chargebacks.

Where does analytics enter the Bitcoin ecosystem? As with all things disruptive, analytics helps identify patterns and make sense of bitcoin transactions by bringing a new level of visibility and insight.

And here’s how.

Bitcoin contracts between buyers and sellers have a variety of parameters associated—from timing and limitations to nature of spending conditions. Using analytics, data within and beyond these contracts can be interpreted to help ensure their integrity. In addition, analytics can shine a light on illegal and unethical activity, which benefits insurers, law enforcement, and others.

Analytics' predictive capabilities enable the analysis of Bitcoin-centric dialogue across social networks to help predict currency value over time. Analytics can also help financial institutions with assets in cryptocurrencies comply with the Bank Secrecy Act and other anti-money laundering (AML) regulations.

For legitimate users, the speed of Bitcoin transactions makes it a promising currency platform. Together, Bitcoin and analytics are set to disrupt traditional commerce roles within the payment ecosystem.

Learn how to get more from cryptocurrencies with analytics
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