European Tech School Webinar with Chainalysis

so again welcome everyone I'm Victoria Gaggle co-founder of European tech school and European blockchain convention like as I said just before welcome everyone just a few words about us for the what the ones that don't know us yet so we are European tech school and European blockchain convention European tech school is basically an online school where we do online blockchain web free courses the cool thing is that all our lectures are live stream so nothing is pre-recorded I guess uh well there's plenty of pre-recorded education content out there but the cool thing is here that everything is basically live lectures so um then a few other words I mean so as I said it's I think really one of the cool things about our school is that all the Lakes is alive then our professors all come from leading companies in the space so I think there is nothing better to be taught actually by a leading expert in the space so they are coming from companies as consensus IBM fakeman coinbase Circle and even other traditional players in the space such as Bosch or no actually so um yeah that's basically a few words about us if you uh ever considering doing an educational program you are very welcome to reach out to us at European tech school and again as I said welcome to everybody I see a few more people joining in now welcome everybody and that's it this is basically European Tech schools so I would like now to introduce Dahlia this is our special guest today the senior product manager at the analysis one of the leading blockchain analytics companies in the space if not the leading I'm not sure maybe you are the leading right um so Dalia the state is yours welcome and before of course we want to know get to know you a little bit better so it would be nice to get a few words from you to understand who you are but also to understand why did you decide to join the crypto industry absolutely well first of all thank you so much Victoria and the ETS team for having me here uh hi everyone I'm Dalia candiel like Victoria mentioned I'm a senior product manager here at chain analysis and um a little bit of background into into me right so yes I work in crypto now I'm a product manager now but like pretty much everyone on this call we take very different paths to where we where we are now and and I thought I'd share some of uh some of uh my Journeys and um and so I'm actually a computer engineer originally and when I say originally I mean like really really originally I'm not going to say how many years um but it's it's definitely been a while uh I actually uh I think career shifts has definitely been a theme uh throughout my throughout my career I started off in Academia uh teaching the future Generations as I like to think of it for a few years while while doing a masters at uh at my uni in the computer engineering department and at a point in time I'm pretty sure there are there are a few folks here who have done a literature review for a thesis it's tough but at some point I was like not for me you know so I decided to move into something that's a little bit more applicative and get exposure to the uh like corporate industry and just Industries as as a whole and so I pivoted into uh manufacturing management at the time and then decide figured out that well actually I always love kind of that little Crux in between the technical bits and the applicative bits and um I really do enjoy simplifying kind of the technical for for broader audiences and so I moved into Consulting it's a mix of problem solving and doing exactly that simplifying complex and a few years into that I realized that well actually the favorite part of that is kind of improving the products as you as you go along right not just using them and pivoted into into product management at the time and was at a very Niche industry then before are going into crypto it's organizational transform transformation analytics to be specific and like some folks on the call I thought I was the only one but it turns out that this is actually a theme where crypto or web3 in general kind of finds you as opposed to the other way around and so I got contacted by folks from from chain analysis read up on the blockchain and crypto space and also on channels this and really the the rest is history I thought I should take take the plunge as they say it and and it's been over three years now of taking said plunge and it's still as exciting as ever sorry I'm back Dahlia very nice very nice and also interesting to see how you went from yeah studying computer science to be more on the academic side and now being in the crypto space between I guess the tech side and the business side as a product manager very nice thanks cool so I think another thing I would like to understand for you I mean how how is it to work in crypto compared to some of the other industries that you've been working in in the past few years I actually have a counter question like how is it not right um it's definitely not boring right definitely not boring um so it really checks off several like a few boxes for me like continuous learning massive check being surrounded by incredibly intelligent and humble people again check check um and it's it's really for me it's it's become the space for you to kind of get into and be in if you're looking to constantly push the boundaries of what it is that you know right and it's moving very very quickly which is a plus if that's what you're into um and and that really appeals to me and then from a slightly different angle um I well this was this has been like a few years where all their decades now but from another angle it's it's not every day that you really get the opportunity to shape an industry and actually be part of shaping an industry that's emerging and and flourishing and really evolving every single day rather than here um and I always like to make that comparison with the the good old days of the.com uh boom when when internet Founders are spinning up their companies at the time right I really do feel that it's uh it's very similar in that respect very nice I I do agree this is definitely not a boring industry new things are coming up right every month every week and and you're right I mean this is definitely the space to be if you want to shape any industry right I mean this is definitely so um yeah very nice cool and then yeah I would like also to understand um so so it's still a very young industry so what what do you think um in your professional opinion that's going to happen I mean before crypto is going to be mainstream it's going to be something adopted in general and not something you know still it's still small now right I mean it's growing like crazy but it's still it's still a small industry absolutely and I think you you hit on a great keyword there right mainstream and I can't help but where my product management hat in at least the first response to this question because I think that in order for a um an industry to be truly adopted right it really needs to be accessible by everyone and what I mean by accessibility in the sense is from a technical complexity perspective uh crypto as it currently stands is it's pretty technical right like if you think to the to the well olden days I suppose when you set up your your first wallet or when you sent funds for to someone else it must have been like not everyone can deal deal with with hashes right like just sending typing in the address like imagine if you'd gotten one of these uh one of these kind of characters wrong and so from from my personal opinion I really feel that crypto is very much in kind of the like Chasm of the product adoption curve and it needs for for it to be a lot simpler um and focus on like really solve some of the friction that you have with the consumer experience and it that's key in order for us to cut for it to kind of cross that um and so I'd say that's that's the first part with me wearing my uh my product management not on but the second piece to this is really around I'd say trust and Trust ability in general um if you take a look at any of the well like things that we take for granted I don't know now right like part of your day-to-day if let's use the a debit card as an example um that was actually created I think it was back in the 60s or something along these lines and it took a few decades in order for it to actually reach Mass adoption right and the reason that that happened like any new technology where there's still fear to kind of start using it um I I have to admit to being one of the slightly later adopters of Apple pay for example but it's important for in order for Mass adoption to kind of take place a catalyst for that is really support by institutions having regulations in place having just generally standards of contact a conduct done or not but I think that's kind of my take on it very interesting and yeah I I agree of course I mean if if something is not easy to use this is this is definitely not going to help at all um well I mean I remember when I was logging into the internet in the 90s I mean you know you had to connect the modem and like whatever I mean yes I mean it was it's not was it wasn't extremely difficult but still you it was there was some steps right to to actually manage to connect the internet so of course that was uh definitely I remember being the go-to personal for all things technical right like oh the the internet's not working and you're like yes hit hit the reset button everyone you know it's at the back of that router but yes I I totally hear you yeah yeah yeah yeah but also how old are you with the modern thing and that well I mean I'm 35 so when I was connected to the internet when I was young that was the way to do I do look younger you know I know but uh no but Daddy what you just also said I mean definitely like fear and then of course regulation and like institutional adoption is extremely important right this is absolutely um and I'm even thinking now this is just an example I mean I'm originally from Denmark and we removed all um like how do I say like physical Banks I don't know like 15 years ago so all I mean all the ram mothers and granddads use credit cards and debit cards since 15 years ago and now I live in Spain and like it seems like we still keep here like the the physical Banks and then grandmother and Grandpa pop can go in and do the stuff I mean so there's a lot of like fear from from that side I mean and I know there's nothing to do with crypto but definitely I mean you need to kind of like you know support and remove this fear and absolutely and and like physical Banks right you have that that connection you go into a bank you see someone you talk with them you get through your Assurance from all of those interact like micro interactions right and they're like okay great I now know I've sent my money to whoever um and I can be certain of that so of course there's there's like the personal interaction element to that of as well just from a psychological standpoint yeah yeah indeed cool well I think that now Dalia it's time to dig into the little quiz you have prepared right yes this is one of my favorite Parts um let's stick into it guys be ready with your with your phone because you're gonna scan a QR code now yes please so this is actually uh one of my favorite Parts whenever it is that I have one of these chats and uh I it's kind of a play on on Truth or Dare but in this instances it's less let's bust some myths kind of addition and so let me just share my screen and yes this is a Ghostbusters um kind of image for those of you who remember that yep oh yes and so like Victoria's mentioning just quickly scan uh the QR code really this is this part's meant to be as interactive as possible no right or wrong answers right like just throw it out there um and let's kick it off so one of my first questions and favorite what word comes to mind when you think of cryptocurrency and feel free to throw anything in there and we'll go through the results together all right I'll give it a few more seconds all right let's take a look nice see a few folks are still typing things in okay so Bitcoin that's yep one one of the first ones absolutely I love how there's Freedom there oh in capital Fantastic Future Love It awesome all right well if it's bigger means more people wrote it I believe so yeah I think so right yeah all right cool and for the next one so do you think crypto is anonymous and untraceable true or myth give it another few seconds all right nice myth I can definitely tell that you've probably taken courses with ETS here which is fantastic nice so yes it is absolutely sorry it's absolutely a myth right as majority of you know by the looks of it sounds a bit um blockchains are inherently public right they can't be they're mutable ledgers they cannot be changed or kind of tampered with um in that sense and a great thing about it is anyone your average Joe Jane person could just log in if they've got internet access uh just connect to the internet go to a block Explorer and you know the the world's your oyster you can take a look at all all transactions happening on on like Bitcoin or ethereum or any other blockchain as well and so like in a nutshell crypto is actually a lot more transparent than other traditional forms on finance like like for example do you have any idea of what's all the transfers that banks are are sending from from one person to the other no right we cannot actually see that information whereas with blockchains you can which is fantastic all right and then next one crypto is regulated truth or myth almost a 50 50 split there most folks think think it's a myth let's let's take a look it's actually true um so crypto exchanges which are basically the equivalent of Banks I suppose for for crypto it's basically it's a centralized exchange where you could basically send um either by crypto or kind of sell it and and ramp out into into Fiat dollars uh British pounds Etc Euros Etc et cetera and so crypto exchanges actually fall in the US and similar kind of um formats here in in Europe and just globally depending on the regulations they fall under the bank secrecy act in in the US and really what that means is that they have to have anti-money laundering and know your customer policies and like procedures in place and what that really means from a consumer perspective is you're going to go through identity checks right if you compare it to traditional Finance you can't really set up a bank account without them first checking number one who you are right so identification and doing some form of screening over your source of funds and that's very similar to what exchanges need to do as well and so they have to have AML policies and controls in place and in fact a lot of the blockchain analytics tools in the space including ours and in this case our compliance products allow exchanges and kind of the private sector within the crypto ecosystem to do exactly that to be able to monitor that transaction activity and if there's anything that seems fraudulent right then they could take further action and alert the authorities for example and there are a lot of Trends moving across like globally where regulations definitely becoming way more of a Hot Topic it's escalating pretty quickly and policy and regulations are kind of slowly trickling through as well and then for my personal favorite so one thing I didn't get into and the reason this is for my personal favorite and I'm biased is because I am a product manager for uh within our investigative suite and so I'm actually product manager for one of our investigative Solutions and so I'm curious to hear your take on whether you think crypto is used primarily for illicit activity or not Let's uh let's give that a couple of seconds to brew see the Little Numbers almost stopped moving all right okay excellent folks seem to think it's it's a myth right it's only four percent of you all that had entered and you're right so it is a myth it's not primarily used for illicit activity but like any emerging technology criminals were sadly one of the first early adopters and because of that fact they help shape a lot of the negative connotation around the space um and its overall reputation but the really amazing thing about this is because of the transparency of the blockchains it really allows for analytics to be built on top of it and then to use all of that data in order for companies such as channels it's a Thai actual criminals to real world uh entities wherever possible and we're going to kind of cover that and a fun little fact um in tidbit is based on our research and Analysis actually elicit share of cryptocurrency activity was very very negligible at like only just under 0.15 last year which is really fantastic to see and if you're ever interested in reading more about uh about illicit activity in the space like feel free to check out our crypto crime report on our website too all right and I'll hand it over to Victoria amazing thank you so much Dalia thank you and also cool to see that only 0.15 percent of the activity last year was dirty dirty activity when it comes to crypto this is I don't know I mean I don't know I don't have the number when it comes to cash I guess it's difficult or Fiat money but I'm sure it's higher than 0.15 so very interesting to see then cool okay Italian so I would like to understand a little bit more now about the analysis yes so so what's the mission I mean what's the mission of your company why are you here why are you here why are you so big why are you so big well excellent excellent question right as as always so really our it I'd like to simplify it in one sentence right when it comes to the mission our model is really building trust in blockchains um and it comes around securing the future for it as well right so the way we do this is by analyzing publicly available information so blockchain data also kind of providing all of that and working with within with all actors and players in the ecosystem as well like government agencies exchanges financial institutions from across the globe and really provide them our compliance and investigative tools for them to be able to understand the space better understand what's happening on the blockchain and as a simple example if for if someone's investigating a a scam or a hack for them to actually have the tools at hand to be able to to do exactly that follow the money and we'll go into that in a little bit cool and and and so so as a company how can you then help the industry Implement better practices so and I touched on this just a little before right um in in one of the earlier questions so I think that and again personal opinion like without crypto cannot actually Thrive right without the development of very clear regulation implementation of standard audit practices and actually and that really translates into some form of collaboration between both public and private sectors right like imagine had debit cards or even the banking system as a whole imagine if that weren't regulated it probably wouldn't be such a core integral part of our day-to-day life if if that hadn't happened right and and so going back to your question um Channel says like our products facilitate exactly that they facilitate that collaboration and we don't just stop there so we also host a a conference on on a regular basis uh it happens several times a year all all over the world really so it's Global where are we being bring together leaders from the different areas and experts from all parts of the cryptocurrency ecosystem really in order for um for folks to share their their different experiences and expertise and even success stories and most importantly best practices and that way facilitates that conversation between between everyone oh very nice and how many are you now in the company do you know that wow it like definitely over 800 Folks at this point and and Counting it's grown tremendously since since I first joined for sure wow so what number employee were you you know that number 200 I don't know one four something what number 140 something yes yes I forgot that last digit but I'm pretty sure it's something in that ballpark nice very nice cool okay so I mean you already talked a little bit about the industry but I mean I think it's interesting for the audience to better understand so what's what's blockchain analytics analytics about because after that we're going to dig into one of your um business cases study and so I think tell us a little bit more about the industry and then from there we can dig into the to the case study sounds like a plan so blockchain analytics really um if if we pair back the blockchain piece just for a second right it comes to the bread and butter of any data analytics right so there's going to be a data enrichment process and phase first and foremost and in the context of blockchain analytics specifically what really what that means is it we it takes publicly available information so like transaction data for example uh X address sent to y address and it sent this amount with the transaction hash with particular date and then it's um enriches let's say all of that information all of that data with open source intelligence and the idea behind this is to tie those pseudonymous entities that we were just discussing right in um in one of the questions and tie those to real life entities um and so that's kind of the main goal let's say and what's blockchain analytics is and the way that's done is of course uh using like I mentioned using open source intelligence proprietary information if we were to use an example uh just to make this clear I I for one always like an example and also very visual person so let's say there is a crypto scam that's being advertised online right they're probably going to have an address in order for you to send the money to them for for example and so you you can very quickly say okay great this address is actually tied to that particular scam and kind of operation and and then use other here ways of enriching the data and like proprietary bits and pieces to kind of enhance that and kind of grow that entity even even further if that makes sense and and so that's kind of the the data piece right um and without that data platform there's there wouldn't be able for for you to do any of of the analysis hence the term analytics and so the second piece to this is around all of the reporting that comes on top of that right so for example um how many transactions has a particular address or or entity for example been kind of involved in one where they lost active and and kind of build all of that and most importantly and this is where um the anti-money laundering policies and whatnot that I mentioned it's really important to know if a particular entity was also involved in Ellie illicit activity by tying them to the real world entities that I mentioned before and really all these two things kind of are the engine that power all of the workflows that the entire entire ecosystem really needs so auditing investigating Bad actors and even compliance as well thank you thank you Dalia so I think now it's time to dig into the case study but actually I would like to ask our audience to put the camera on just one second so we can have a little picture of you guys uh yes Carlos fantastic Richard also good yeah oh the check people are here right yeah yeah make sure that you're here and then we want you to smile for a second and then we're going to dig into the the case study with Dahlia um yes are you ready with a beautiful smile hell oh yeah good Daniel are you taking your photo or should I or I can't but I'm smiling anyway yeah I can do it let's wait 10 seconds for a few minutes but you just stick stick with your smile oh more faces because you're gonna take from each screen okay but I'm ready yeah be good to say cheese should we smile now Daniel oh foreign we needed to take a few pictures fantastic guys okay Daniel we are ready now to dig into the the case study thank you guys alrighty let's jump in can everyone see my screen again yes perfect fantastic okay so for the for the second fun um fun piece again biased right so blockchain analytics in action um I thought it would be fun to walk you through two things number one an example of illicit activity of course I with the caveat I mentioned illicit activity makes a teeny tiny portion of of the funds and activity in General on the blockchain but um it would be fun nonetheless to see how if we were in the shoes of investigators and dare I say I I always like to to use this um and I'm not sure if there are any James Bond fans in the group but I uh I like to think that I actually work with Q to help James Bond kind of catch the bad guy so let's pretend we're James Bond here um just for for funds and Giggles so I'll walk you through an example of um of actually an nft kind of hack so in our example um a victim unfortunately had purchased um not unfortunately not this bits but they had purchased a bunch of nfts um for for our purposes and unfortunately this is the unfortunate part they felt victim to a fishing scam like the rest of us unfortunately and the reason I really enjoy this particular case study it's uh it involves one of kind of the first at least that I've heard of real life application of an nft which is pretty sweet and so I thought we could walk through it and actually see some of the blockchain analytics products in in action right so we've got a bunch of nfts that were stolen and so going back to James Bond Let's Pretend We're James Bond investigating this case right now and what you'd probably want to do what we'd want to do at this point in time is figure out who stole the nft right figure out where where it went and so without blockchain analytics what you'd probably be starting off with is something that looks like this you'd start off by searching if you know the transaction hash where that nft was stolen you'd go onto a block Explorer you'd search for it you'd see uh you could just based up based on this you'd be able to say okay great a uh a board apiat Club nft was sent from one address to the other you probably have no idea what 0x C8 like who they are right but you're like okay great I I'm gonna look for zero xc8 and actually have to go through this every single time per per transaction right that for me I don't know about you but that for me would be a little bit mind-boggling I would definitely prefer something else more visual in nature and so this is where blockchain analytics comes into play right it's the visualization piece and so one of the remember I said there were four nfts just one of them was on our uh one of the transfers and and um stolen nft transactions was on the screen before but here what you're actually very easily seeing is the actual transfers of the nft that were stolen from our victim right so you could see the word ape Yacht Club one here you could see that it was sent like this the victim lost it the hacker gained it and you could see this repeated for all of the other nfts that were stolen as well um and where the hacker kind of got control of that and at this point in time and I know we said we'll play James Bond for our litter case study but let's again pretend for just a split second to be the hacker what do you think they'd want to do here right they're probably in this to make a quick few um few bucks and so what they'd actually do here is sell it to folks that don't necessarily realize that they're that they're purchasing a stolen nft and so going to our next kind of step in the puzzle you'd want to follow the transfers um of from the hacker to the nft right and you probably want to know how much they paid for it so you could see that for the board API Club here they actually made like around 100 over 100 East in in this instance which is a pretty hefty sum at the time um and they repeated that for every single nft right so they they kind of sold it they got eth and then at this point in time again thinking with our hacker hat on what they'd be doing is they'd want to try to obfuscate their Trail right they're going to try to throw off any throw-off James Bond off their scent by any means possible and so what they do is use obfuscation techniques um and and things that are like tools that are available to them as part of the crypto ecosystem as well and one of these things is actually they they could start hopping from one chain to the next for to another right and really what this means is um we saw on our other end that they had um sold right so they sold the nfts for eth here and what they did is they actually sent that eth swapped it on a bridge first they swapped it to to run BTC and then they used the bridge to hop from one chain to another in this case from ethereum to bitcoin and they took those funds and they started doing other using other obfuscation techniques um to mask their Trail now eventually at this point in time what you as shifting back to James Bond I appreciate that we keep going back between hacker and James Bond here but going back to James Bond for a second what what you're really after as an investigator at this point is you want to be able to tie them to some form of cash out points and a cash flow point in this instance is going back to traditional Finance right so they'd go to an exchange as a simple example and they'd go there and they'd take they'd Swap all of their crypto for example um in this case Bitcoin and they'd swap that out for um or let's say dollars in in this case and really what you're after here at this point is being able to identify who they are so remember the AML policies that we we'd mentioned and when you're actually signing up for uh an online kind of account with an exchanger or other instances what you'd probably need to do is provide your identification and and this is kind of what law enforcement or James Bond would be going for they try to identify number one that cash out point with with the goal of figuring out who that person is and what they've done here is kind of split the BTC after they've chain hopped from ethereum to bitcoin um and uh and try to uh split their funds over several addresses before actually consolidating it and and cashing out and that's that's really it for me on this one I thought I'd give you a little bit of a teeny tiny taste of what what a crypto investigation would look like with all of the uh the bells and whistles and appreciate of course that this is this is high level and would naturally involve a lot more detail but yeah hope it's at least gotten you uh got a new interest it's uh yeah no more and just to understand in this specific case did you then figure out the name of the hacker that would be the ultimate goal okay so so yes I guess that's right I mean just for me to understand yep that that would that would be what would happen uh typically but not necessarily uh sure for what a specific one if that makes sense yeah okay yeah yeah okay very cool very nice thank you thank you for for making it so visual um very nice so guys don't consider hacking anything because you're gonna there is tools to figure out all this very nice thank you Dalia okay I think now