Definition ∞ Graph analysis is a method for studying relationships between entities represented as nodes and edges in a network structure. In the context of blockchain and digital assets, it involves mapping transaction flows, identifying connections between addresses, and uncovering patterns of activity. This technique helps visualize complex data, detect anomalies, and understand system dynamics. It is a powerful tool for tracing asset movements and identifying associated entities.
Context ∞ Graph analysis is increasingly employed in cryptocurrency security and compliance to identify illicit activities such as money laundering, scam networks, and Sybil attacks. Law enforcement agencies and blockchain analytics firms leverage these tools to follow the movement of funds across decentralized ledgers. Ongoing advancements focus on real-time processing of vast transaction graphs to enhance detection capabilities.