Bitcoin was founded on a pillar of anonymity. Of course, everyone today knows that the anonymity provided by cryptocurrency is subjective. While Bitcoin transactions can be anonymous on a certain level they are also transparent. What this means is that anyone with access to the Bitcoin blockchain can analyze transaction data. That is exactly what a project known as Whale Alert does.

Whale Alert provides live tracking and analysis every day for millions of Bitcoin transactions. In this way Whale Alert is able to create some interesting data. The project has been able to spot dormant wallets containing many thousands of Bitcoin as well as identify accounts that are very active. The stated goal of Whale Alert is to create more transparency for cryptocurrency.

About Whale Alert

How do you create transparency in an environment that was designed to promote anonymity? That is the question that Whale Alert was created to answer. It has been very successful in this regard. That doesn’t necessarily make everyone happy, but there are those who think Bitcoin transparency is necessary.

Millions of transactions are made each day on cryptocurrency blockchains. The number of transactions is increasing all the time as more people and institutions embrace blockchains and Bitcoin. These transactions are carried out between a sender and a receiver without the need for any third-party oversight.

Whale Alert was created to track transactions on the Bitcoin blockchain and the blockchains of other cryptocurrencies. The project uses its own proprietary technology to convert transaction data into a standard format. The information that is gleaned is then stored in a database that is maintained by Whale Alert.

Whale Alert can then use the database that it has created to make an analysis. The results of such analyses can be very interesting. Results can also lead to the identification of Bitcoin addresses with specific individuals and businesses. A complex AI program developed by Whale Alert has the potential to remove anonymity from Bitcoin wallets. Understandably, that doesn’t make everyone happy.

The primary way that Whale Alert functions is through its Twitter account, @whale_alert. There are over 100,000 people who follow the Whale Alert twitter feed as the project broadcasts large transactions live. This has also caused some people consternation.

The Concerns About Whale Alert

The first problem that many cryptocurrency investors have with Whale Alert is its stated mission to eliminate Bitcoin anonymity in favor of transparency. There are many Bitcoin investors who were drawn to the cryptocurrency in the first place because Bitcoin was thought to be anonymous.

An anonymous form of currency is appealing to many people. There are the obvious proponents such as criminals who want an easy way to launder money, but that group is probably smallest of those concerned with anonymity. There are plenty of everyday people who like the idea of spending money without leaving a record behind.

Take the guy who likes to gamble online at offshore casinos. Maybe he lives in the US where online gambling is still prohibited in many states. Or maybe he just wants to hide his online gambling activities from a spouse or from an employer. By using Bitcoin the gambler doesn’t have to use a credit card to make deposits.

Another example is the freelancer who does work for people all over the world. Bitcoin is a much simpler way to get paid, and in some cases getting paid this way can even protect the freelancer. Let’s say there is a person in China who is writing pro-democracy articles about the protests in Hong Kong. If this person’s activities were to be discovered by the Chinese government their safety could be at risk. Better if the freelancer doesn’t have to explain payments from a left-wing blog.

The examples are numerous. Anonymity serves a purpose with Bitcoin, but has Bitcoin always been that anonymous? Really? Yes and no. It has always been possible to create a Bitcoin wallet and receive Bitcoin anonymously, but records of each transaction are preserved forever on the blockchain. It only makes sense that someone would figure out how to associate wallets with identities.

The Positive Side of Whale Alert

There is a positive side to Whale Alert and the idea of transparency. Mainly the benefit is for cryptocurrency exchanges who are subject to regulations such as Know Your Customer and other oversights by financial institutions like the Securities and Exchange Commission in the US.

As cryptocurrency becomes more mainstream it is only logical that it will be subjected to more scrutiny on a worldwide basis. Exchanges which permit the buying and selling of Bitcoin are going to be required to maintain transparency Whale Alert is making it harder for those who hold large amounts of Bitcoin to move the tokens around without gaining attention.

Those who invest regularly in the cryptocurrency markets would also say that transparency serves to protect investors. Whale Alert has identified several Bitcoin wallets which contain thousands of Bitcoins. It appears that these accounts are dormant. Whale Alert is able to monitor the accounts to see if any major selling is happening.

The reason this is important is because a big sell of a large number of Bitcoins could have a devastating impact on the market. One account identified by Whale Alert is said to contain 80,000 BTC. Can you imagine what would happen if those Bitcoin were suddenly sold? It is likely that the market would crash and BTC could become virtually worthless overnight.

Bitcoin Transparency and Whale Alert

In time many may come to agree that Bitcoin transparency is a necessary evil. At that time the contributions of projects like Whale Alert will probably be hailed as genius. Until that time there will be those who regard Whale Alert as a troublemaker.

Our final thought is that the existence of Whale Alert should serve as some kind of cautionary tale to Bitcoin investors who have questions about anonymity. It may be best to proceed under the assumption that cryptocurrency transactions can be linked to your identity if the right agency makes a determined effort to do so.

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