Common Challenges in Cryptocurrency Investigation and How to Solve Them

The introduction of digital currencies to the public has started a revolution in the world of finances. So naturally, the decentralization is the most important aspect of them all. But, also, numerous other elements have risen as well. So, implementing this system is something that is occurring currently.

Numerous companies have understood the benefits of these, and they have adopted it as a legal payment method. Nevertheless, along with the benefits, numerous challenges have emerged as well. Implementing this system to the existing one is quite a challenge. We are talking about diametrically different systems.

That is why it is essential to take enough time to prepare the current financial system for this implementation. Furthermore, the security aspect is crucial. Finally, that is why it is important to be prepared for cryptocurrency investigation when needed, and you can learn more about this at

We do not believe that even the experts understood why it was important to consider all these problems at first. However, these days, it is essential to comprehend all the significant elements before making all sorts of changes needed.

Therefore, today, we want to discuss the common challenges that can pop up during the cryptocurrency investigation. Moreover, we will touch on how to solve them properly.

Securing Digital Evidence


The first challenge we want to address is securing digital evidence from encrypted platforms and wallets. We are talking about an extremely hard process to conduct. It consists of numerous elements crucial for securing digital evidence, and the experts must have the appropriate knowledge. The wallets used for the transactions are there to employ robust encryption to protect digital assets.

Therefore, you can see that this is just one of the elements that make it hard for the investigators to access the relevant information from the wallet. Thankfully, specialized forensic techniques and collaboration with experts from other fields help track transactions and retrieve all digital evidence. Nevertheless, to do so, it is essential to establish the protocols to help retrieve the information. Working on these requires a lot of time and effort.

Studies have been done on this subject for the last decade, roughly since the introduction of Bitcoin. The conclusion we can take from this is that the government has thought about including this concept in the system since then. However, it was problematic to find the right way to do so.

Clustering Techniques


Analyzing the blockchain includes the clustering of crypto addresses to digital wallets. Furthermore, this is achieved through monitoring the transactions conducted through the public ledger. What does clustering mean? Clustering is a procedure that helps collect the crypto addresses belonging to a certain digital wallet. After all of these are collected, the investigators can track them efficiently.

Only one individual or a company owns and uses the digital wallet. However, that does not mean the company’s or an individual’s identity will be known. Instead, we are talking about knowing where the source is, where the transactions are coming from, and where they go. Monitoring these transactions becomes much easier after this process. Monitoring wallets instead of addresses increases efficiency.

Monitoring the addresses doesn’t tell much since they change for every transaction. Those who have used e-wallets before know that this is the case. Instead, monitoring the activity of the e-wallet will show just how the owner is functioning and the transactions made in the process. So, the team of investigators can look through all these elements and find the conclusion that will lead them to success.

The Lack of Regulation

The biggest problem investigators encounter today is the lack of regulation regarding digital currencies. But, of course, we are talking about most countries out there. Sure, there are some examples of companies where this field is regulated properly, making investigators’ jobs significantly easier. But not all of them are fortunate enough to have the regulation and technical resources to do the same job efficiently.

We can see that this is going to change in the future. Every day we hear news about a country considering introducing a national digital currency or regulating the market. The reason is quite simple: this payment method’s adoption is accelerating today, and you will see that more people are interested in this concept than ever before.

A good example of this happening is El Salvador. The country adopted Bitcoin as its national currency alongside the fiat one. Surely, it is impossible to create a system like this without introducing the proper regulation, which will make all the processes significantly easier than before. Introducing the regulation is a way to resolve numerous problems, probably the most efficient one.

Follow the Money

Finally, we want to touch upon the technique that is one of the oldest ones, but it still holds value. We are talking about following the money technique. Of course, some will immediately consider this as impossible regarding digital currencies since the system is decentralized. But, we will share some crucial information with you that will help you understand that this is, in fact, possible.

The investigators will follow the movement of the money from e-wallet to e-wallet. Analyzing the fund movement around the blockchain system is possible. Furthermore, tracking the transactions conducted through the public ledger is possible. As you can imagine, this is quite a challenging process when discussing blockchain, but conducting it is certainly not impossible.

One of the ways investigators do this is by using open-source technologies and blockchain analytics. But the most efficient way to do so is to use the methodology that will be combined with the cryptocurrency conversion exchanges or e-wallets. By doing so, the investigators can discover the identity of the individuals responsible for making these transactions. That’s how it is possible to conduct the procedure.

The Bottom Line


Conducting the cryptocurrency investigation is a complex procedure. It requires knowledge from numerous fields on behalf of the expert. Here, you can find the commonest challenges you can come across regarding these investigations and how you can resolve them as best as possible.

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