What's a dusting attack?

The digital currency industry has revolutionized finance, but it also faces security risks such as hacks, scams, and fraud. While blockchain networks enhance security through decentralization, they're not entirely immune to evolving threats from bad actors.One lesser-known attack is the dusting attack, which can compromise user privacy without immediate detection. Learn more about what dusting attacks are, how they work, how to identify them, and the steps you can take to protect your assets.

What's dust in crypto?

In the crypto industry, the term dust refers to tiny amounts of crypto coins or tokens. For example, the smallest unit of Bitcoin (BTC) is one satoshi, representing one hundred millionth of one BTC, or 0.00000001 BTC. As such, a satoshi represents dust in the form of Bitcoin.These tiny amounts of crypto commonly appear in crypto exchanges and wallets as leftovers of trades. They are usually so small that users do not even bother with them. However, as we are about to see, even small amounts of crypto could play a larger role.

How's crypto dust made?

An example of the scenario, you purchase a certain amount of BTC and then use it to make various transactions. Once all the transactions have been carried out, a small amount of crypto will remain in the wallet. The excess amount of crypto is of such little value it serves no purpose. You can't even use it to pay for transaction fees.Alternatively, crypto dust can be transferred to you, which is a form of a malicious attack. This is a relatively new form of attack where hackers invade the privacy of crypto owners. They do it by sending a small amount of digital currency to multiple addresses. They then track these funds to reveal who the owner of the wallet is.

Is crypto dust harmful?

Crypto dust is not inherently harmful or a threat. It can appear naturally whilst carrying out transactions. The accumulation of crypto dust is a common occurrence; most of the time, it’s nothing to worry about.Crypto exchanges help alleviate the issue associated with crypto dust by allowing users to swap their dust for governance tokens. This encourages users to make more transactions, which results in the exchange benefitting from the related fees. Meanwhile, users can get rid of the dust in their wallets.While hackers might identify you as a crypto user by dusting attacks, they still can’t get your private key. It's therefore essential to use a secure wallet and keep the details on how to access it to yourself.

What's the dusting attack, and how does it work?

Hackers can exploit dust to compromise crypto users' privacy. By sending small amounts of crypto to a wallet, they can track where the funds move.Many users manage multiple wallets to enhance security and privacy, distributing their assets to conceal their identity and holdings. However, since all blockchain transactions are publicly recorded, hackers can analyze movements and potentially link wallets to their owners.Dust is effective because it often goes unnoticed. If hackers were to send large amounts, users would likely become suspicious and take precautions. By keeping transactions small, attackers can discreetly monitor wallet activity and trace financial movements without drawing attention.

How does the dust attack actually work?

For the dust attack to take place, the dust sent to your wallet needs to be transferred out of it by its owner. The attacker wants you to send this dust to your other wallets alongside other funds. That way, they can connect your wallets to your exchange account and uncover your identity. This only works with centralized exchanges, where you have to go through identity verification to open an account.Once the attacker learns who you are, they can target you with phishing, extortion, and other crypto scams. In other words, the dust attack itself is not an attack. It's more like setting the stage for an attack — the first step in setting up a greater crypto scam.

How do I spot a dusting attack?

Dusting attacks can be tricky to notice if you don’t pay attention to the amount of crypto in your wallet. To notice it, you should note how much crypto you have down to the last decimal. Alternatively, you can also monitor your wallet’s transaction history. Any transaction that delivers dust to your wallet will still be recorded like any other payment.

Can dusting attacks steal cryptocurrency?

A traditional dusting attack can't be used to steal your cryptocurrency. The attack consists of sending funds to your wallet and waiting to see where it'll go from there. The danger comes if you move the money from that wallet to another. Hackers can use sophisticated tools to track this money and connect your wallet to your identity.As previously mentioned, attackers can't steal your private keys with a dusting attack. They make their next move once they know your identity and mark you as a crypto user. They could contact you and demand payment through ransomware, blackmail, or similar means. Once they know you have cryptocurrency, they can choose any approach they deem the most effective.

How do I counter a dusting attack?

For most cryptocurrency users, being a victim of a dusting attack is unlikely. Hackers tend to target wallets that own a substantial amount of crypto.Even so, everyone should take steps to protect themselves from such an attack. While unlikely, there's always a possibility of an attack occurring. Therefore, the best method of countering dusting attacks is to eliminate the dust in your wallet.

How do I get rid of dust?

By keeping your wallet dust-free, you can quickly detect any unexpected dust deposits, helping you prevent hackers from tracking your other wallets. Fortunately, there are several ways to eliminate dust and enhance your privacy and security, though some methods depend on your wallet provider’s features.If you’re holding cryptocurrency as a long-term investment, it’s best to avoid moving it unless necessary. Keeping your assets dormant minimizes exposure, making it harder for attackers to track them.Another option is to use privacy tools like a VPN to mask your traffic and enhance anonymity. While this won’t prevent your transactions from being recorded on the blockchain, it can help obscure your activity from anyone monitoring your network. Additionally, consider using a hierarchical deterministic (HD) wallet, which automatically generates a new address for each transaction, making it more difficult for hackers to trace your transaction history.

Dusting attack: another danger in the cryptocurrency industry

A dusting attack is a subtle but dangerous attack that could expose you as a crypto owner. There are hackers out there who specialize in targeting crypto users.There's a reason why privacy and security are so valued in the crypto industry. Unfortunately, dusting attacks threaten to take that away from you. However, there are ways for you to counter them and protect yourself. The simplest one is to eliminate the natural dust as often as possible. That way, you will immediately notice if new dust forms. Alternatively, you can check your transaction history for suspicious, unknown transfers.

FAQ

What’s a dusting attack?

A dusting attack aims to expose the identity of crypto owners. Hackers send tiny amounts of crypto to a target’s wallet and monitor where it moves, hoping to link transactions and uncover the owner's real identity.

How do I prevent dust attacks?

To minimize the risk of dust attacks, users can drain their wallets of excess funds, making it easier to detect any new dust deposits. Another approach is to regularly monitor transaction history for unexpected transfers.

Is crypto dust harmful?

Crypto dust itself is neutral—it’s just small leftover amounts of cryptocurrency. However, under certain conditions, it can be exploited for tracking and privacy attacks.

What's dusting on blockchain?

Dusting on the blockchain refers to a privacy attack designed to identify crypto owners. It’s primarily used against high-value holders but, in theory, can target anyone.
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