In this issue
- Antinalysis: The limits of laundering
- Solana: Sol eclipse
- Alibaba: Going, going, gone
From the Editor’s Desk
As a still-emerging industry, crypto is more vulnerable than most to the poisoning of the well.
The past week saw a reminder of that, with news of the launch of Antinalysis, a dark web tool allowing crooks to check whether their funds could be identified as proceeds of crime by otherwise clean crypto exchanges.
News of the launch came in a blog post by blockchain investigation firm Elliptic, prompting Antinalysis’s developers — at least one of whom is credited with the creation of Incognito Market, a darknet marketplace for narcotics — to take it down a mere eight hours later.
It’s to be expected that criminals will continue to use the crypto space to conduct illicit activity, but it’s a measure of how far the industry has evolved that such episodes no longer define its public image.
Indeed, if anything, the sector is enjoying a moment in the sun, as the cryptocurrency market rises from its post-crash funk.
The crypto coin of the moment is indisputably Solana, whose value has scaled new heights following the release of the Degenerate Ape Academy, the 4G blockchain’s first NFT project. Never mind the name — look at the buying frenzy it sparked.
Even in China, the blockchain business is going gangbusters, as the popularity of non-fungible tokens fills the gap left by crypto markets and mining banished by the country’s current rulers.
In an outcome that authorities may have failed to anticipate, longtime competitors Alibaba and Tencent appear to be cooperating to sell NFTs rather than trying to clobber each other. Will their summertime romance last, or will that well of goodwill run dry amid rekindled rivalry and antitrust action?
We’ll be watching.
Until the next time,
Founder and Editor-in-Chief
1. Antinalysis axed
By the numbers: Antinalysis — over 5,000% increase in Google search volume.
A blockchain analysis tool named Antinalysis was launched on the dark web last week to help criminals analyze the risk of their tokens being flagged by regulated exchanges as proceeds of crime, according to a blog post by Elliptic, a blockchain investigation firm. The tool was, however, suspended only eight hours after Elliptic’s blog post was published.
- Like other blockchain analytics tools, Antinalysis traced transactions back through the blockchain to determine whether funds were connected to any illicit activity. It ran on the notorious Tor browser, and users could generate a risk report for approximately US$3.
- The results provided by Antinalysis were similar to those provided by AMLBot, an anti-money laundering screening program, suggesting that Antinalysis was developed on the AMLBot application programming interface. However, Elliptic found the results provided by Antinalysis to be inferior.
- Antinalysis was created by one of the developers of Incognito Market, a darknet marketplace for narcotics sales launched in 2020. The marketplace accepts payment in both Bitcoin and Monero, the privacy coin popular with drug cartels and ransomware perpetrators.
- One of the developers of Antinalysis told a BBC reporter that the anti-tracing tool was not meant just for criminals. The developer said: “Our team believes that in the current democratic world, every one last human being has the right to do whatever they want and possess [a] complete overview of their privacy while not violating [the] individual rights of others.”
Forkast.Insights | What does it mean?
The creation and subsequent takedown of Antinalysis reignites the enduring debate between the “it’s none of your business” camp and its “what have you got to hide?” antagonists. In a world where people’s privacy is increasingly encroached upon by tech giants and government agencies, the tension between individual privacy, on the one hand, and law enforcement and national security, on the other, remains a touchy subject.
When the first cryptocurrency, Bitcoin, was introduced in 2009, its ownership and use were initially thought to be private and anonymous. That led to Bitcoin becoming a favorite of money launderers and criminals. It could even be argued that the coin’s first main use was for dark-web users of Silk Road, an online black market founded in February 2011 by the pseudonymous “Dread Pirate Roberts,” later revealed to be computer scientist Ross Ulbricht, who is currently languishing in an Arizona prison cell.
The reality is that cryptocurrency does not provide true anonymity, and users of Bitcoin as well as most major cryptos are pseudonymous, at best. Bitcoin is supported by a blockchain — a distributed ledger in which each node verifies that the ledger has a full record of the entire history of all Bitcoin transactions that have occurred since its creation. Bitcoin transactions can therefore be tracked, particularly if a wallet used to send or receive them can be linked to, or associated with, a known individual or entity.
With the help of blockchain analytics firms such as Elliptic and Chainalysis, which can track addresses and transactions, connecting Bitcoin transactions to malicious actors has become a valuable part of the law enforcement toolkit, leading to the capture of dozens of cyber criminals.
In most reports, Antinalysis has been labeled as a criminal pushback against the type of services that Elliptic and Chainalysis provide, but the service is open to everyone, “not just criminals” as one of its developers said in a statement on Twitter.
Although the dark-web tool is no doubt useful for bad actors, since it can allow money launderers to know how much more rinsing they may need to do before sending their crypto to an exchange, it could also arguably serve legitimate purposes.
All online financial transactions tend to carry a lot more personal information than simply what’s being transacted, and the issue inevitably returns to the deeper privacy issue of how financial institutions, and the government agencies that oversee them, use and store personal information. If an individual’s personal information related to a financial transaction is leaked or hacked, it’s possible that the individual’s data might be used to compromise the security of their funds.
This is particularly germane to the original cryptocurrency. Bitcoin is a fungible asset, but there is a limited supply of 21 million BTC, which means that as adoption increases, many innocent users are likely to acquire some tainted coins. When anyone buys Bitcoin they will therefore inherit its history, so knowing its provenance can be useful to avoid future complications and possible connections with criminal activity.
2. Solana eclipse
By the numbers: Solana — 3,400% increase in Google search volume.
Solana is leading a surge in the cryptocurrency market, with the price of its SOL token soaring more than 70% over the last seven days and hitting anew all-time high of $74.31. This week, eager buyers also pushed SOL into the crypto top 10, eclipsing Uniswap, whose UNI token is currently trading at $26.59.
- Solana’s new all-time high follows the launch of the networks’ latest non-fungible token collection, the Degenerate Ape Academy, one of the first to be launched on Solanart, the Solana blockchain’s first NFT platform. According to Solanart.io, the tracking site, NFT sales worth 135.8K SOL have so far been made through the project.
- Solana has surged also partly thanks to the Aug. 9 launch of Wormhole, a communication bridge between Solana and other major decentralized finance networks that allows existing projects such as Terra, Ethereum and Binance Smart Chain to move tokenized assets seamlessly across blockchains to benefit from Solana’s high speed and low cost.
- SOL is now trading just below Polkadot, which has a total market capitalization of more than $23.5 billion. SOL’s market cap is currently just south of $21 billion, and Uniswap’s market cap sits at over$15.5 billion.
Forkast.Insights | What does it mean?
SOL’s price is rising fast, but Solana is just starting out in the decentralized finance and NFT space.
Last year, the so-called DeFi summer saw Ethereum’s uses — and subsequently Ether’s price — surge dramatically. However, Ethereum also struggled with soaring gas prices and a congested network buckling under the weight of 96% of all DeFi transactions.
With DeFi demand soaring and the NFT boom showing no signs of abating, Ethereum had to contend with what Ethereum co-founder Vitalik Buterin called the scalability trilemma. According to Buterin, it is not possible to maximize equally the three desirable attributes of blockchain technology — decentralization, scalability and security — and trade-offs between them will always be inevitable.
Solana so far appears to have solved the blockchain trilemma, creating a fast, scalable network without compromising on security or decentralization. The protocol introduces eight core technologies that enable transactions to scale proportionally with bandwidth, resulting in industry-leading transaction speeds and enterprise-level security.
The capabilities of Solana were on full display over the weekend as the Degenerate Ape Academy NFT launched on Solanart — the fourth generation blockchain’s first NFT project. The collection of 10,000 unique ape NFTs sold out in just eight minutes, and the buying frenzy saw Solana’s trading volume exceed US$2.5 billion, pushing the price of SOL to its all-time high. Meanwhile, transaction fees remained minuscule, at around US$0.01, network speeds were maintained, and there was no congestion.
Before the Degenerate Ape Academy, there were barely any notable NFT projects on Solana. After last weekend’s performance and the recent launch of Wormhole, however, we may be about to witness a major shift in the DeFi and NFT markets. Solana’s performance will likely drive demand for SOL, and thus push prices to new highs.
3. Alibaba’s auction block
Chinese e-commerce conglomerate Alibaba is launching a new non-fungible token offering for its Alibaba Auction service, underlining the tech giant’s ongoing efforts to adopt blockchain technology.
- Bit Universe, a company operating under the Tree Graph Blockchain Research Institute, has launched an NFT platform named Guang Jian, which is set to serve Alibaba Auction’s NFT display and bidding needs, according to a company statement released on Monday.
- Guang Jian will facilitate Alibaba Auction’s services for items related to e-sports, digital copyrights, digital arts and digital trading cards. It is connected to services built on the Tree Graph Blockchain and the New Copyright Blockchain, a piece of infrastructure backed by the Sichuan provincial government, according to the statement.
- Users will gain access to the new platform through Alibaba affiliate Alipay or WeChat, a mega-app owned by Tencent.
Forkast.Insights | What does it mean?
As both Alibaba and Tencent race to roll out NFTs to capture a larger share of the booming market, it’s becoming clearer that the two longtime rivals are finding a common ground amid the increasingly intense scrutiny by Chinese regulators. The fact that Alibaba Auction’s new platform will be accessible through WeChat marks a huge step toward future collaboration and adds a higher probability that the two tech giants may continue to open their platforms to one another.
Another interesting development in Alibaba Auction’s latest offering is that the new line of NFTs will be traded over a blockchain backed by the Sichuan provincial government. Over the past year, both Alibaba and Tencent have been targets of Beijing’s clampdown on big tech within China, and both have been accused of monopolistic practices.
It may be the case that the move by the archrivals to work together is a step toward appeasing increasingly aggressive regulators in Beijing. From that standpoint, their opening up to one another makes sense, but from a business perspective it could upset their investors.
Although both Ant Group and Tencent began their ventures into fintech by first offering consumers a way to pay digitally through their respective brands, Alipay and WeChat Pay, both of those services account for very little of each company’s bottom line.
For Ant Group’s comprehensive marketplace, selling in-house products and myriad third-party ones such as microloans and insurance, Alipay has been the exclusive form of payment. For Tencent’s growing list of services, WeChat pay has had the same exclusive payment status. By opening up their platforms to one another and allowing either payment mechanism, margins are likely to become thinner for both.