You’ve heard of KYC – Know Your Customer – and possibly also KYT – Know Your Transaction – but have likely yet to experience it in action. KYC have lately become the norm for crowdsale registration and exchange verification. Now, KYT is on the rise, and it threatens to blacklist bitcoiners whose cryptocurrency is deemed unclean.
How Clean Is Your Crypto?
It seems hypocritical to expect cryptocurrency users to account for where their coins came from. Surely it’s no one’s business what your bitcoin was spent on before it was passed on to the next person, and besides, doesn’t discriminating against specific coins go against the very concept of fungibility? Like it or not, KYT is on the rise, and if left unchecked, could create a two-state bitcoin, with one highway for the verified and one for the unverified and their “dark money”.
One company whose name is synonymous with the rise of Know Your Transaction is Chainalysis. The firm, who specialize in following the money trail through the blockchain, are a controversial company to say the least. On the one hand, their software has helped trace the movements of Mt Gox’ stolen bitcoins. But on the other hand, cryptocurrency users don’t like to think of their every transaction being recorded and associated with their real world identity in perpetuity. And having recently raised $16 million, Chainalysis’ snooping tools are coming soon to a blockchain near you.
When KYC No Longer Cuts It
Chainalysis isn’t the only company advancing the field of KYT, for better or worse. It is now routine for some crowdsales to ask investors where their funds were sourced, and to confirm that they weren’t obtained by illegal means…