In blockchains, "transparency" is a relative term

The "transparency" of blockchains is probably the most commonly cited pro in the case for cryptocurrencies. It partly enables "trustlessness," the ability to remove central administrators from the world of finance.

But transparency is a relative term.

• Why it matters: Bitcoin, and almost all its imitators, make all the data about their operations public, but it's not simple for a normal person or even a sophisticated company to make sense of that ocean of information.

Coin Metrics, one of the companies that makes sense of it, sees the elegance in that transparency.

• "With a blockchain, I know where my five bitcoins are today. I don't need a financial institution to do that," Tim Rice, Coin Metrics' CEO tells Axios.
• On Bitcoin, anyone can just see which address holds every bitcoin. "The on-chain dataset is the most beautiful side of working on public blockchains," Rice said.

Yes, but: Firms like Coin Metrics can see much more in the public ledger than would be obvious to newcomers.

• Making sense of the data is not easy. Just pulling it out is tricky enough, but knowing what kind of patterns to look for takes expertise.
• Interpreters are needed, and, besides Coin Metrics, there are many, including: Dune Analytics, Delphi Digital, Messari, Chainalysis, and others.

Details: Experienced blockchain sleuths can look at sets of transactions and see patterns that aren't obvious to the uninitiated.

• A Bitcoin address is like a bank account. Addresses with few bitcoins and few transactions are almost certainly just a normal person, Rice explained.
• Large institutions' addresses hold very large amounts, though not all addresses have been matched to people or organizations.

• Nefarious activity usually has a certain pattern, Rice explained. It might make lots of small transactions from a wallet or a few wallets that are likely to be related.

What's next: As institutions get into crypto investing, they need a very deep understanding of how this technology gets used.

• “Developing a robust risk management framework is critical to our roadmap as we work toward launching digital asset services,” Katey Neate of BNY Mellon's risk team said in a statement.

Of note: Coin Metrics just closed a $35 million Series C round, led by Acrew Capital and BNY Mellon, to fund further advances in blockchain intelligence and expand to international markets.

The bottom line: "We're kind of the Rosetta Stone," Rice said.