Crypto Dusting Attack — What is it and How to Protect Your Anonymity

By August 16, 2021 No Comments
Crypto Dusting Attack — What is it and How to Protect Your Anonymity

What is a dusting attack in cryptocurrency? What is the best way to protect yourself, your crypto holdings and business from this form of hacking.

Among the benefits of cryptocurrency transactions include transparency, decentralization, and anonymity. While these have their advantages, you can be susceptible to risks through dusting and airdrop attacks. These activities often go unnoticed by clueless crypto holders. 

The good news is there are ways to protect yourself against malicious entities wanting to expose you to danger.

Blockchain is not quite anonymous

There’s a notion that bitcoin is private. Yes it’s anonymous, but not private.

A transaction is made up of inputs and outputs. When you spend, a transaction is created using your address as the input. When you receive, an amount of bitcoin is given to your address, becoming the output.

All of these transaction details are recorded on the blockchain. Because that ledger is public and transparent, so are your transactions.

Any uninvolved party not directly transacting with you can examine the blockchain and see your spent or received cryptocurrency. However, they won’t know it’s you particularly as the owners of the addresses are not revealed.

Even if a non-involved party may not know who you are, they might figure it out by monitoring your blockchain activity. They may be able to detect if your wallet has been “dusted” and identify you in the future.

A dusting attack can reveal your identity

When you use bitcoin as payment, at least one address (UTXO) is selected that closely matches the amount due, then you receive an output UTXO as change.

For example, you had three UTXOs in your wallet — $2,000, $399, and $5, and you had to pay for something worth $400. You could pay using the UTXOs $399 and $5, then you would receive a UTXO worth $4. All these are recorded on the public ledger.

Dusting is when a hacker sends small amounts of a cryptocurrency called ‘dust’ to a number of addresses. If you receive dust with a small value, you’ll have a UTXO in your wallet. As you use your wallet, the attacker can monitor when the dust UTXO is picked up and what addresses they go to.

In the long run, if they identified all the addresses linked to your wallet, they can also figure out the amount of crypto you have. Then you could be a target.

In dusting, the amount of crypto sent to accounts is very small and is calculated in units known as satoshis; 1 satoshi = 0.00000001 bitcoin. It is smaller than the minimum transaction fee required when using cryptocurrency. It’s understandable why many people won’t notice them.

Protection from a malicious dusting attack

As the information on cryptocurrency transactions is public knowledge, it’s important to protect yourself, along with your holdings, business, and anonymity. Aside from ensuring antivirus and anti-spam protection for your wallet, consider the following safeguards.

If you suspect you’ve been dusted, don’t remove the dust. Use a wallet app that allows you to mark very small and unknown deposits in your wallet. It can prevent the dust from being used in your other transactions.

Monitor your balance at all times. Look for wallet apps that send notifications when you receive new funds. If the app detected satoshis in your crypto wallet, you’ve possibly been dusted.

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