The digital currency industry is known for many reasons, not all of which are positive. Despite its positives and technological advancements, it is a prime target for hacks, scams, frauds, security breaches and theft. Even though cryptocurrencies managed to increase their networks’ security through decentralization, they are not immune to these threats. What’s more, bad actors seem to be getting more and more innovative with their approaches.
One type of attack many might not even recognize is called a dusting attack. This guide will discuss dusting attacks, how they work, how to spot them, and how to protect yourself. Since dusting attacks are difficult to spot, understanding its details is crucial for your safety.
What is dust in crypto?
To explain what a dusting attack is, we must first explain what dust is and its role in the industry. In the context of 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 is crypto dust made?
Let’s say 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 cannot 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 is therefore essential to use a secure wallet and keep the details on how to access it to yourself.
What is the dusting attack, and how does it work?
Now that you understand what dust is let’s talk about dusting attacks themselves. Essentially, hackers can misuse dust to endanger crypto users’ privacy. All the hackers need to do is send some dust to crypto users’ wallets and keep track of where the funds go.
Many users own multiple wallets for their security and privacy. Users can hide their identities and amounts owned by keeping the coins in different wallets. However, the blockchain allows hackers to track transactions and reveal who the owner of the wallet is.
Attackers use dust as it tends to go unnoticed by the wallet owner. It would be easy to notice if they sent large amounts of crypto, and when users start to notice the transactions, they start asking questions and raising their guard.
So, by sticking to low amounts, hackers get to silently monitor transactions tied to the wallet, and follow the money.
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 KYC 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 is more like setting the stage for an attack — the first step in setting up a greater crypto scam.
How to 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 cannot be used to steal your cryptocurrency. The attack consists of sending funds to your wallet and waiting to see where it will 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 cannot 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.
Can you 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 they might be unlikely, the chance of the attack happening is never 0%. Therefore, the best method of countering dusting attacks is to eliminate the dust in your wallet.
How to get rid of dust
By not having dust, you can notice immediately if some dust appears in your wallet. That allows you to prevent hackers from tracking down your other wallets. Fortunately, several ways exist to eliminate dust and increase privacy and security. Some methods depend on your wallet provider’s functionality.
If you have cryptocurrency in your wallet as a long-term investment, it is best to avoid moving it. Of course, if it is necessary to do so, then you don’t have much choice. But if not, then leave the coins dormant, and the attackers won’t be able to track them.
Another option is to use privacy tools like VPN to mask traffic and increase anonymity. This won’t protect you from having your transaction recorded on the blockchain. However, it helps if someone is monitoring your traffic specifically. You should also consider using a hierarchical deterministic (HD) wallet. This type of wallet automatically makes a new address for each new transaction. That way, hackers won’t be able to trace your transactions as easily.
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 is 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.
FAQs
What is a dusting attack?
A dusting attack is a type of attack meant to unmask crypto owners. Hackers send small amounts of crypto to the target’s wallet and wait for them to transfer it elsewhere. The attackers hope to learn the owner’s true identity by following the money.
How do you get rid of dust attacks?
Getting rid of dust attacks means completely draining the wallet of any excess funds. That way, users can quickly notice if new dust appears. The other method is to monitor their wallet’s transaction history for unknown transfers.
Is crypto dust bad?
Crypto dust is neither good or bad. It represents small amounts of money that can be misused under certain circumstances.
What is dusting in blockchain?
Dusting on blockchain represents a privacy attack meant to reveal the true identity of crypto owners. It is mostly used against wealthy owners who hold large amounts of crypto. However, it can be used against anyone, in theory.
