What is crypto dust?
Basically, dust is the amount of cryptocurrency equal or lower than the transaction fee. For example, Bitcoin’s dust limit is imposed by Bitcoin Core, and is around 546 satoshis, or 0.00000546 BTC. The wallets’ nodes applying such a limit may reject transactions equal or smaller than 546 satoshis.
Moreover, crypto dust can also be a small amount of cryptocurrency, remaining after the trade, as a result of errors or transaction fees. This small amount of crypto isn’t tradeable, but is convertible to the native token of the exchange.
At its basics, crypto dust is used for legitimate purposes, meaning it doesn’t pose a significant threat.
However, crypto users should still be aware of what a dust attack means and take measures to protect themselves.
What is a crypto dusting attack?
A crypto dusting attack occurs when a small amount of crypto assets are sent by malicious actors to different wallets. Similar to dust, it is being scattered across blockchain networks.
As we know, blockchain technology is pseudonymous. The owners of the crypto addresses are not defined by names or any other personal data. At the same time, the blockchain ledger is transparent, and all transactions are visible to everyone.
When attackers transfer dust to crypto wallets, they aim to invade the privacy of the users by tracking down their funds. The goal here is not stealing cryptocurrencies, but associating the target’s address with other addresses, and identifying the victim.
Users of most public blockchains can become victims of crypto dusting attacks.
Is crypto dusting a scam?
It is important to say that not every crypto dust transferred to a crypto wallet is a scam.
The dusting technique can be used by governments trying to link a specific crypto address to an individual, to identify criminal activities such as money laundering, terrorist threats, etc. Dusting can also be used for ensuring regulatory compliance and safety.
Furthermore, developers may use dusting to conduct stress tests and determine the robustness of the software. This helps identify potential issues and vulnerabilities in the software.
Also, crypto traders can receive dust as a result of trades, and this is not considered an attack. Some exchanges even offer the chance to swap these small amounts of cryptocurrency for their native tokens to use in future trades.
What is a dusting attack, and how does it work?
What malicious actors rely on is mostly the fact that crypto users often don’t realize they have received a small amount of cryptocurrencies in their wallets.
As we already said, blockchains are transparent and traceable, and it is possible to track down transaction movements, leading to identification of wallet owners. For the attack to be effective, the wallet owner must combine the crypto dust with other funds in the same wallet.
The target of the attack may unknowingly send the dust to an off-blockchain organization, by including a small amount of cryptocurrency in other transactions.
How to identify and prevent crypto dusting attacks?
A sign of a crypto dusting attack is the sudden appearance of a small amount of extra cryptocurrency, unsuitable for spending or withdrawing.
Although it seems unlikely to become victim of a crypto dusting attack, you must take a few steps to protect yourself, such as:
Using privacy tools to increase anonymity;
Using a hierarchical deterministic wallet to create a new address for each new transaction;
Use dust conversion services to swap crypto dust into native tokens;
Taking these steps will help you protect your funds. Of course, there are many threats in the crypto world, and you must always be aware, in order to protect yourself, and your digital assets.