Arkham: A Platform for Deanonymizing the Blockchain

Blockchain transactions are inherently public, allowing any third party to view and investigate them. However, this raw transaction data is by default unprocessed and anonymous, and therefore useless. It needs to be analyzed and deanonymized to be rendered usable. Arkham is a crypto intelligence platform that systematically analyzes and deanonymizes blockchain transactions, showing users the people and companies behind blockchain activity, along with data and analytics about their behavior. To generate intelligence at scale, Arkham uses Ultra, a proprietary AI-powered algorithmic address matching engine. By systematically linking blockchain addresses to real-world entities, and providing aggregate data and analytics that give a complete picture of their behavior, Arkham reveals the activity driving digital asset markets, enabling market participants to outperform. This paper also introduces the Arkham Intel Exchange, a decentralized protocol for the buying and selling of data and labels designed to significantly increase liquidity in the intelligence market. By generating intelligence at scale and facilitating its spread, Arkham makes crypto markets more transparent, efficient, and just.

Arkham is founded on seven theses about crypto and the role intelligence plays in it:
1. Deanonymization is destiny. In the early days of the internet everyone was pseudonymous. Now, people use their real identity online. MySpace to Facebook was a microcosm of this transition. The same process is happening with blockchain identities - consider the rise of ENS and of NFT profile pictures. Eventually, everyone’s blockchain identity will be linked to their real-world identity.

2. Access to crypto data will be decentralized. In traditional finance, data is hidden in black boxes guarded by established players such as brokers, exchanges, regulators, and banks. In crypto, raw transaction data is visible to everyone due to the public nature of blockchains, but in practice, it only becomes usable once processed, aggregated and analyzed by data platforms. Existing tools are expensive and limited to only a select few, but ultimately they will be disrupted by tools available to everyone.

3. Crypto is becoming a core part of the global financial system. Crypto will reach mass global adoption because it is a more efficient, reliable, and robust financial system. Once you use crypto, there’s no going back. Explaining to your bank on a wire form who you want to send your money to and why becomes intolerable after you’ve seamlessly made large transfers in a browser wallet. Any foundational technological shift encounters resistance and other difficulties, but overcomes them through a process of creative destruction. It will be the same with crypto.

4. Crypto intelligence will be widely adopted. Depending on their production cost and use, technologies vary in how widely they are adopted. Only governments and major corporations own rockets, but billionaires use the same smartphones as everyone else. In a world where crypto is used by all, crypto intelligence tools are more like smartphones, because they are useful for anyone using crypto, from those tracking their stablecoin remittances back home, to multibillion dollar firms trading complex derivatives.

5. The crypto intelligence economy will be ≥$30 billion annually. As tools become more powerful and crypto reaches global adoption, crypto intelligence tools will serve as a real-time 1 map of the new financial system and will therefore be a utility for serious participants and observers. The market for conventional financial data is $30 billion annually, led by companies such as Bloomberg and Palantir. Compared to traditional financial data, on-chain data allows for more useful analysis, especially when augmented by new AI-based analytics. These factors will make the market for crypto intelligence at least as large as its traditional predecessor.

6. The future of crypto data is entity based. Of the five Ws, Who comes first. To best understand crypto activity one must first and foremost know who is behind it. This is why Arkham provides intelligence at the entity level. Entity-level intelligence provides a general purpose tool that verticalizes the crypto data industries for trading, compliance, research, and portfolio tracking. It is the key to providing an all-in-one platform.

7. Crypto intelligence will power self-regulation. Self-regulation is necessary for any industry to be healthy, irrespective of the decisions and laws of external rulemakers. It involves founding institutions to safeguard trust and quality in an industry by monitoring, promoting and enforcing standards of conduct. This concept is not new - for centuries, working communities such as guilds have machined standards and guidelines for practitioners to abide by. These institutions will develop naturally in crypto as users learn where to place their trust, reducing the need for external regulation and allowing the industry to better meet the challenges it faces. The investigation and verification of on-chain activity is the foundation of crypto self-regulation, and crypto intelligence tools will play a central role in this process.

In combination, these seven theses support a vision for a total crypto intelligence platform that provides deanonymized, entity-based intelligence to everyone. Such a platform needs to provide total coverage of the blockchain, service the full range of use cases, and be affordable for a normal person. It needs to systematically collect, aggregate, and attribute transaction data to form a complete picture of crypto activity.