How tracking crypto transactions affects security

Crypto transactions do not require identity verification, which is why early adopters believed that digital assets like Bitcoin and Ethereum were anonymous.

But as monitoring tools developed, it became clear that not only could you track crypto transactions, but you could often link them to real people.

Why is crypto transaction tracking useful?

Tracking cryptocurrency transactions helps avoid many issues when working with digital assets, including losing funds or sending them to the wrong address.

It also increases the transparency of blockchain networks and improves trust. But that is not the only reason why users need crypto transaction tracking.

Verifying authenticity and completion

Tracking transactions is significant when exchanging crypto to ensure the transfer actually occurred.

This is critical for P2P and OTC deals. In such deals, there is no third party, such as an exchange, so verifying the hash on-chain proves that the funds were sent by the actual counterparty, not a spoofed address.

Main transaction statuses:

• Pending — the transaction is awaiting confirmation. It is in the mempool* but not yet written to the blockchain. While it remains pending, it still can be canceled.
• Confirmed — miners or validators are processing the transaction. To be written into a block, several confirmations are required. The required number depends on the specific network and network load.
• Completed — the transaction reached the required number of confirmations and is fully recorded. Completed transactions are final and cannot be changed.
• Failed — the transaction was not completed, for example, due to a technical error or insufficient balance to pay the network fee. Blockchain explorers usually show a specific error code.

* Mempool — a queue of unconfirmed transactions that miners or validators have not yet included in a block.

Tracking helps you understand why a transaction is not confirmed for a long time. That can happen due to low fees, high network congestion, or protocol errors.

Asset protection and security

This is another primary reason why tracking matters. The blockchain's transaction history lets you detect whether someone else gained access to your wallet.

Note: mobile crypto wallets have push notifications when transactions occur. This helps a user detect unauthorized transfers quickly and save at least part of their assets.

Data analytics

Services collect transaction data, which investors and traders use to analyze network dynamics and make trading decisions.

For example, tracking transactions helps measure network activity and follow movements of large wallets ("whales"). Experts use this data to forecast prices.

Tracking also helps prepare for taxes and banking compliance. When your transaction history is transparent, it is easier to prove the origin of your coins and avoid withdrawal blocks.

Detecting "dirty assets"

By analyzing on-chain activity, you can see how a user received funds. This is called an AML check.

Tracking helps detect whether someone used mixers or other tools to obfuscate the trace — and avoid receiving funds from a "contaminated" address.

If dirty assets enter your wallet, exchanges and OTC services can reject your future transactions during AML checks.

Note: AML checks can be done with specialized tools. For example, BestChange provides AML checks to verify that an address is clean and free of blocks and other issues.

How to track a transaction

You can track a crypto transaction if you know at least one of the following:

• address (wallet ID)
• input or output address
• transaction hash (unique transaction identifier)

Knowing a user's address lets you see all their transactions. Knowing a hash enables you to determine the sender's address.

Step-by-step:

1. Find the identifier. When you make a transaction, the hash appears in your wallet history. Exchanges also show you the hash when you send or receive crypto.
2. Choose a blockchain explorer. There are specialized ones for each chain (Mempool.space for Bitcoin, Etherscan for Ethereum, Solana.fm for Solana) and multi-chain explorers (Blockchair, OKLink).
3. Paste the hash in the Explorer search. After this, you will see all details: amount, sender and receiver addresses, timestamp, fee, etc.

With this information, you can then follow the chain of movement. This is useful, for example, to find where stolen funds were sent.

Most wallets also show transaction history. Usually, clicking the hash inside the wallet opens the exact transaction in an explorer.

A regular user cannot identify the real person behind a wallet without specialized analytical tools — but in theory, it is possible.