Apr 18, 2023

As part of CoinDesk's Projects to Watch 2023, Miguel Morel, founder and CEO of Arkham, joins "First Mover" to discuss how the blockchain analytics company traces transactions.

Video transcript

This week coin is taking a closer look at how 19 cutting edge projects are addressing problems in crypto and around the world. And joining us to discuss all of that and more is founder and CEO of A and Miguel Morell. Uh great to have you on the show. Thank you for having me. All right. So Arcum Intelligence hosts a relatively new platform that enables users to scrutinize Blockchain addresses it clearly the need of VR uh how did a come about? So in 2019, I, I had the idea to, to generate a platform based off of all of the information that existed on public blockchains. I think that one of the original sort of visions for decentralized cryptocurrencies overall uh was the fact that that they would be auditable. Uh And that many people would be able to just analyze the blockchains directly in order to get access to information. Uh But the reality was that it was very difficult for normal people to get access to uh the data that existed on chain because it was highly technical. Of course, there were a number of different explorers and so on. Uh such as Ether scan um that could, could be used to analyze broad Blockchain data directly, but nothing that could really provide insights uh that were very easy to, to find. And so that was the, the original idea for why I decided to create a, that was the original reason. But what was, what, what is your mission going forward? Like, what's the goal? No, dumb, dumb. So the overall vision for the project is to move blockchains from a sort of uh fictitious narrative of anonymous dark actors who are uh running around doing all kinds of illegal activity on chain uh without anybody being able to see them uh to AAA world where we can have decentralized uh uh Cryptocurrency that provide a lot of value, a lot of utility very, you know, that are very easy to use and reach global adoption um in a way that can actually be transparent and, and highly visible. Uh Obviously, last year showed us that there were a number of very large companies um that, that were able to, to kind of operate in the shadows. Uh oftentimes potentially even doing things that that may have been illegal. Um And, and no one knew, right? Many people were sort of caught with a veil over their eyes uh from that. And so I think that companies like a will bring about the, the next generation of uh of Cryptocurrency users uh and will allow them to actually, you know, be safe and understand what it is that they're actually uh investing in trading in uh what sort of platforms they're using and, and you know what's going on in the background. So what are some interesting takeaways that you've picked up recently from block looking at Blockchain analytics or Blockchain data? So I think that in general, there's been this very large movement towards uh towards the layer two. I think that that has been a very interesting uh find on, on our parts. I think when I first got started in the Cryptocurrency industry, everything was uh on, on on layer ones, primarily, you know, Bitcoin uh Ethereum and, and people were transaction and uh and building applications on those, I think once those applications were built and ultimately, the smart contracts became significantly more complicated. Uh The networks started getting congested, everything started becoming, you know, significantly more uh expensive uh in order to, to use these different on chain products. That's really when the demand for layer two projects uh uh started. Uh and then afterwards, you know, now projects such as Arbitron, for example, uh have actually started to surpass layer one raw volume and uh and actually started getting a, you know, acquiring significantly more users. Uh And so I think on chain that has come across very, very clearly um that a lot of the activity is beginning to move more towards layer twos than layer ones. OK. Uh You know, I wanted to ask you one question that you might be able to help me with because there was an investigation going on that coin was doing. We're still kind of doing it. Uh It's, it's well known that several others are doing it because this is all related to the sanctions against Russian uh crypto enthusiasts, uh families, oligarchs, whoever you want to call it. Uh This is about the sanctions that were there in Russia and that they were trying to get the money out through crypto and people knew about wallets and addresses. But people were not being able to figure out investigators, journalists, even agencies were not being able to figure out who's behind those wallets. I just want to understand from you how you would be able to help with that. So at a we basically take a multifaceted approach to actually being able to gather intelligence on different users. Um So the the first kind of primary thing is actually analyzing raw blocking data directly. Uh The second where is where we kind of take a level beyond uh when we actually analyze data that exists off chain as well. So that would mean actually taking in information from a variety of different sources across the internet. Um that could potentially point to the identity of the, of the user overall, many of these things are not done by a a manual analysis I suppose is, is is one of the most important parts about the Arco platform the overwhelming majority is actually done algorithmic. And so this can often times lead to five means that a a human may not have been able to see right, machine learning algorithms and different data science techniques can make it a lot easier to actually find this information than AAA human looking at it. Uh And so from Arco's perspective, for any kind of investigation like that plugging in existing info, um you know, you could potentially yield results that human verification may not have found earlier on. So, uh you, you've raised money and raised about uh was it $12 million? And uh some of the, some of the funding you've gotten from also includes uh the founders of um uh and, and open A I and so I, I guess my question here is this II I recently had a conversation with a lawyer who was saying that, you know, she's trying to track down uh somebody hiding a lot of crypto. Do you see ultimately, uh the kind of the, the blend of A I and, and tracing transaction on blockchains making it easier for people to uh you know, everyone from lawyers looking for hidden money to regulators looking for hidden money. Do you think that this might end up opening up uh a wild amount of, of regulators and, and you know, potentially even lawsuits? Uh just because it'll be a lot more accessible to the general public creating that accessibility is actually our goal at, at a overall, I think that a lot of Blockchain analytics and tracing companies started earlier on mainly focusing on working with intelligence agencies or law enforcement specifically, they weren't open to a broader kind of uh market. And so that's actually one of the differences in our business model compared to other kinds of Blockchain analytics services. We don't focus on consulting for, you know, governments, we instead focus on building software that can be used by the general public overall. I mean, you know, our a com users include, you know, lawyers and some of the other um types of people who you mentioned, but it also includes people like uh employees at Coindesk who use it to write stories and to and to do research and to do due diligence. Uh And so yes, overall, I think that the the Blockchain analytics market as a whole, I think eventually everybody will start moving towards trying to find information on chain, not just looking at, you know, price info for example. Uh and, and only using that kind of information to do their investigations. I think that on chain analytics even will actually move to the entire world and Arkham is kind of at the vanguard of that. All right. Well, uh we're not uh well, we're letting you go right now, but we know we're gonna see you in just a short while. That was a CEO and founder Miguel Morell, thanks so much for joining us on, first of all, we'll be seeing you at consensus next week. It's not too late also for all your viewers, uh, anyone else, uh, to buy your tickets at consensus dot com. Coin de dot com. Because you'll hear more from Miguel and many other speakers.

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