The legitimacy of cryptocurrencies is under constant threat from bad actors. Wash trading is a big problem, for example, and it is widespread in the sale of NFTs: one high-profile case was seen in the popular market where 94% of the $2 billion transactions proved to be sold.
How do we find out about this? The NFT analytics site examines block data for eight days. It is not a small business, but a valuable service that must become common if the industry is to improve confidence.
Analytics and data aggregation companies are primed to become the mainstays of the space by providing valuable information about what is happening on the blockchain. In its absence, critics and regulators have been justified in expressing doubts about the emerging technology.
business applications will proliferate, too, as evidenced by the main movement out of Chain link (LINK). Last year, the company announced a partnership with the Associated Press news organization to provide a dataset for the main blockchain, where the data can be used to automate key processes that occur on the chain.
Whether it informs the market about election race calls, triggers on-chain trading when the company’s quarterly financials are released or even improves the display NFTs based on real events, there is significant scope in this one partnership. Applied to the entire business world in many industries, there could be a big shift in how data is used.
Properly collected and analyzed data has the potential to weed out dodgy companies and individuals and prevent them from pursuing their ill-gotten gains. In theory, blockchain data is publicly available. It follows that anyone can do their own work. Practically, this is not possible because the average vigilante or small analytics company does not have the technology to rapidly generate data sets in a scalable manner.
Knowing exactly what is needed in data terms is a significant hurdle. So bespoke platforms must work with industry players—and more specifically, developers—to draw on meaningful data at a scale never before seen in the blockchain industry. In the early stages, aggregation and analytics will face a steep learning curve.
Apply Data Holistically
For business applications, private blockchains dominate. Customized and structured data can be processed into personal data sets. This would be useful for commercial purposes. When companies have paid good money to draw data based on specific requests, they certainly want to protect it, especially if one considers how the data will continue to evolve due to its blockchain nature and thus remain relevant. Access may be sold to other companies under license agreements.
When it comes to entities that want to siphon data for the public good, there is scope to build data sets that allow for crowdsourced analysis. The crypto industry desperately needs this. There is not enough money to expose the laundering trade and other evil activities: now we rely on the actions of a dedicated minority. Proper universal access to clean data can stimulate the emergence of public bodies that help cryptocurrency become a self-regulated field.
We have barely scratched the surface. Insurers are consumers of big data because it informs their business models because brokers need to know how to charge competitive but profitable premiums. And Chainlink is leading the way here again: last year, it struck a deal with insurance startup Arbol, which provides crop insurance to farmers and companies to provide decentralized weather data. In this case, smart contracts can trigger payments depending on weather condition data.
Traditional businesses face many problems when selling data to third parties but in crypto, this is not a problem, because everything is transparent. However, most projects in the web3 space are not fully decentralized, leading to decisions on whether to take certain data off-chain.
The beauty of an all-encompassing data aggregation protocol is that it aligns on-chain data with off-chain data: companies will be able to manage data links to make them work. Only looking at half the data is good with most projects because all you need is the movement of data in the chain to make whatever decisions you need.
The core technology for successful data aggregating and cleaning process must be cross-chain compatible because when The Ethereum Virtual Machine (EVM) network. dominating the space, you have chains such as Solana creating cutting-edge solutions as well.
The text itself in the block data must be structured in a way that is specific to a chain such as Solana, because all the technologies that support it are different. Furthermore, the high transaction rate per second offered on Solana means that from block genesis to real-time, the database is much larger than any other chain. There are hundreds of thousands of transactions per second in Solana.
When a database is full of data, it may not be very useful to others. For data cleaning service providers, it becomes very difficult to compile the data to filter the noise from the clean segment when considering the large volume of transactions, many of which are meaningless and useless for analytics.
For centralized chains, data collection and subsequent analysis can help build trust in an environment where the entities themselves control validators while they exercise political control over key players in the entire ecosystem. Once trust is lost, you can’t get it back, so being able to cut through the noise and see what happens with on-chain transactions can be invaluable. This is one of the reasons blockchain data is so important and could lead to drastic changes in the way we interact with cryptocurrencies.