Cryptocurrency and Blockchain Forensics Tracing Digital Transactions

This chapter explores the evolution and significance of blockchain forensics within the broader context of cryptocurrency adoption. It examines the technical foundations of blockchain, including pseudonymity, immutability, and transparency, and explains how investigative methods such as transaction mapping, clustering, and deanonymization are used to trace illicit activity. Key forensic tools and platforms, both commercial and open-source, are reviewed alongside the growing role of artificial intelligence. The discussion highlights critical challenges ranging from privacy coins and mixers to cross-border jurisdictional barriers and ethical dilemmas, and underscores the limitations of current forensic methods. The chapter also analyzes legal and regulatory frameworks, global cooperation, and emerging technologies like quantum computing, emphasizing the need to balance forensic capability with privacy protection and financial innovation.