An introduction from LIQ Platform’s whitepaper:
“ Fraud is a planned series of techniques that individuals have evolved over the history of mankind to take advantage of incomplete systems for monetary or material gain. Fraud in the current cryptocurrency space is a highly imbalanced classification problem for data scientists. LIQ Platform is a private third party middleware solution that detects and risk-rates fraudulent and high volatility transactions through real-time analysis. LIQ Platform sets a standard for companies that conduct financial activities through cryptocurrencies and it is the first known major step in detecting and reacting to cryptocurrency fraud. LIQ Explorer, LIQ Channel, and LIQ RS are presently being developed with a February 2018 final product lead time. LIQ Explorer is part of a real-time fraud decision management platform that draws publicly available ground-truth data from an amalgamated internal block explorer. LIQ Explorer crawls Bitcoin, Ethereum, and high volume alt-coin address data for a variety of variables. LIQ Channel receives public/private categorical data feedback from intermediaries. LIQ RS then uses pre-processing and modeling of data from LIQ Explorer and LIQ Channel to calculate a fraud risk probability value. A globally distributed mining wallet, LIQ Wallet, is expected to be completed and deployed in February 2018. LIQ Wallet block mines by risk-scoring active wallet addresses and rewards LIQ tokens to block miners with installed LIQ Wallets. First and foremost, we do not believe in mandating a new form of “crypto identity” in the cryptocurrency space — identity theft will continue just as in the fiat economy and fraud will continue to exist irrespectively. It is important to note that LIQ Platform’s public sharing of ideas of fraud modeling are extremely limited due to security concerns for model integrity. One advantage of the blockchain vs. the world of fiat is the amount of publicly available data and traceable transactions for making fraud decisions. LIQ Platform, a data-driven fraud solution, unequivocally believes that anti-fraud measures are critical to mainstream adoption or extinction of cryptocurrencies.
Technology outpaces regulation — by decades. The evolving climate of blockchain technology and cryptocurrencies presents a modern day wild west for the uninformed consumer. Regulation has not caught up with the exponential growth witnessed since the inception of Bitcoin. However, many individual investors have split sentiment on regulation. Some individuals are investing in alternative currencies and fledgling blockchain companies with their primary motivation being to ultimately move away from regulation. In the United States, government regulatory authorities from FinCEN to the SEC have developed systems in place to prevent and react to different modalities of fraud in the fiat economy. Unfortunately, reactions for the most part are delayed. Prevention|Detection|Analysis systems may be the only true protection to the consumer. In the past four decades, the task of counteracting fraud has mostly fallen on the private sector to develop revenue-generating fraud solutions in the constantly evolving fraud landscape. In the fiat economy, organizations and institutions use fraud solutions to minimize losses and remain in compliance with different government standards. However, the liability of fraud in the world of cryptocurrencies and blockchain technology has mostly shifted onto the consumer, with the exception of some responsive intermediaries. Without regulatory authority and without centralized and insured institutions, the consumer is left with the repercussions of fraudulent activity or the outcome of how financial intermediaries ultimately decide to respond. There is a non-exhaustive list of fraud types within different sectors of the economy, but the class distribution of fraud within the cryptocurrency space can be narrowed down.”
To continue reading, read our whitepaper at: https://liqplatform.com/images/whitepaper.pdf