SABR, “Palantir for the blockchain”

SABR is a New York-based startup that has just raised $1 million to fulfill its stated mission to “to provide law enforcement with a view beneath the surface of multiple blockchains. SABR aims to ensure that bitcoin and other digital currencies are not utilized for illicit purposes.”

“SABR monitors multiple blockchains to identify and locate criminal activity.”
— – SABR

Recently SABR debuted as one of 42 accelerated startups in the latest round from 500 startups, a Silicon Valley accelerator group founded by alumni from both PayPal and Google. The company attracts attention for their member presentations from a “ badass, global family of startup founders, mentors, and investors.”

SABR received both funding and accelerated training from 500 Startups, and had previously received seed money from Barry Silbert’s Digital Currency Group (DCG).

Silbert, the founder of the DCG and Bitcoin Investment Trust, has been a constant positive influence on the bitcoin ecosystem. He started by adding Bitcoin funds to Genesis trading, formerly SecondMarket, which he founded in 2004. SecondMarket was one of the first institutional options for traders looking to invest to bitcoins, without having to deal directly with the digital currency.

Silbert’s DCG has made investments in over 40 of the largest companies in Bitcoin today, including BitGo, BitPay, BitPagos, BitPesa, Chain, Circle, Coinbase, Gyft, Kraken, Ripple Labs, TradeBlock, Unocoin and Xapo. However, he is perhaps most famous for purchasing 48,000 bitcoins for SecondMarket in a US Marshall service auction of seized Silk Road coins.

According to VentureBeat’s reporting on the 500 startups event, SABR has “attracted the attention of the U.S. Department of Justice, the White House, and other federal agencies.”

“SABR integrates data from multiple Blockchains, as well as other public and proprietary sources. SABR’s unique position and partnerships within the network underlying the decentralized digital currency ecosystem provides access and insight otherwise inaccessible.”
— – SABR

SABR has described itself as a “Palantir” for the blockchain, a name first used by J. R. R. Tolkien. Palantiri were crystal balls in Tolkien’s fiction, used for both communication and as a means of seeing events in other parts of the world.

The name is also used by a PayPal-inspired and funded software company, most famous for its work with the NSA. Former NSA chief Keith Alexander, praised Palantir’s usefulness to the spy agency, for providing “a way of visualizing what’s going on in the networks.” The company is also credited with directly saving lives in theatres of war, including Afghanistan.

Palantir sells data mining and analysis software that focuses on, and attempts to map, identities and behaviors across a range of data. In much the same way, SABR plans to sell its data and investigation service to law enforcement, in situations where digital currencies are a suspects’ medium of exchange.

“At SABR, we believe that the only way to sustain and grow the usefulness and adoption of the Blockchain is to ensure it is used within the bounds of the law.”
— – SABR

Trying to make sense of the database that shows every movement of every bitcoin, the information that is contained in the blockchain, is an extremely large task, but certainly within the realm of possibility.

The difficulty in running a business based on this data comes from attaching identities to all of these transactions. Without access to user databases from exchanges like Coinbase and Bitstamp, where coins are purchased by identified users, the most likely way of identifying the owner of a bitcoin addresses would be to find it in publicly-accessible data, such as on a profile page or social media, so you can tell who it belongs to.

SABR describes its software solution as “a tool law enforcement agencies can use to not only know where bitcoins are being spent, but also keep tabs on who’s party to the transaction.”

In such situations, people who use bitcoin to buy illegal substances, or other items that law enforcement would be looking for, are not at all likely to post their addresses anywhere it can publicly accessed. If this is the case, SABR is of little threat to bitcoin’s privacy conscious.

There is, however, a better argument to be made for SABR’s acceptance in the Bitcoin community. Software and services used for tracking transactions on the Bitcoin blockchain are not new, nor are they even uncommon. “Blockchain analysis” is already used by law enforcement and provided evidence used against Ross Ulbricht in the Silk Road trial.

Furthermore, there are several existing tools and services, some even free, that assist with blockchain analysis already. These include BlockSeer, Numisight, CryptoCrumb, QuantaBytes, Coinalytics, BitIodine, and Blockonomics.

Coinalytics’ Jarvis is perhaps the closest match to SABR, but is more of a hands-on tool than a full service. All of these tools have their own approach to tracking and monitoring bitcoins through transactions, and it doesn’t yet appear that SABR is bringing any new or unique features to the field.

Until the day comes that they announce some kind of partnership with exchanges to give them user data, there doesn’t appear to be any way to advance the whole field, and identify any bitcoin addresses in a new way.

With all of the alternatives to SABR that already exist, it is not hard to imagine that governments were going to find a way to track the movements of coins across the blockchain, and transparency is built into the Bitcoin protocol. At least with SABR, who has been heavily invested in by Barry Silbert’s Digital Currency Group, there is some reason to believe that the people behind it care about the success of bitcoin.