Chain analysis groups Bitcoin addresses using rules of thumb such as common-input ownership and change detection. Learn how they work and when they fail.
Rules of thumb, not proofs
Chain analysis groups addresses into clusters believed to share an owner. The main heuristics:
| Heuristic | Idea | Where it fails |
|---|---|---|
| Common-input ownership | All inputs of a transaction belong to one owner | CoinJoin and payjoin combine several owners |
| Change detection | The output with an odd amount, or a matching script type, is change | Wallets can randomise amounts and types |
| Address reuse | Reused addresses link payments | Only works if people reuse |
| Round numbers | A round amount is probably the payment | Payments aren't always round |
| Timing and behaviour | Patterns match known services | Statistical, not certain |
CoinJoin and payjoin
- CoinJoin: many people combine inputs into one transaction with equal-sized outputs, breaking the common-input assumption.
- Payjoin: the receiver adds an input too, so the transaction looks ordinary but misleads the heuristics.
Why this matters
Heuristics can create false links, linking innocent people to activity that isn't theirs. Responsible analysis states which heuristics were applied and how confident each link is. MyBitcoinExplorer's tracing applies none of them: it shows only factual spending connections and never guesses common ownership, change or identity.
Protecting yourself
Use fresh addresses, Coin control, and avoid merging coins from different sources. See Address reuse and privacy.
How confident is a cluster?
Analysts combine many weak signals. Each heuristic alone can be wrong, and errors compound: one false link can merge two unrelated clusters into one. Good reports state confidence and keep facts separate from inferences.
Heuristics vs MyBitcoinExplorer
Our explorer and tracing workspace don't apply any of these heuristics. We show what the blockchain proves, and this lesson explains the techniques so you can judge claims made elsewhere.
Key takeaways
- Chain analysis clusters addresses using heuristics.
- Common-input ownership is the strongest heuristic, but CoinJoin and payjoin break it.
- Heuristic links are probabilistic and should be labelled as such.
Common questions
Is common-input ownership always right?
No. Collaborative transactions deliberately break it.
Do exchanges use chain analysis?
Many do, to screen deposits for links to known illicit activity.
Does CoinJoin defeat chain analysis?
It breaks the common-input ownership assumption for that transaction, though other patterns before and after can still leak information.
Is chain analysis legal?
Analysing public blockchain data is generally legal; how results are used is subject to local law.