Crypto Dust Attacks and How to Avoid Them

Of CNBCTV18.com 12 August 2022, 07:55 IST (published)

Blockchain and crypto attacks have gradually increased in recent years. This month alone, exploits on Solana wallets and Nomad Bridge resulted in millions of dollars worth of losses. Criminals also use various schemes to exploit projects and deceive users. One of these methods is known as a dust attack.

Although it may sound ominous, these attacks are not trying to steal your money. Instead, they are used by miscreatives to track users and plan further exploits. Therefore, although they may not cause any immediate threat, dust attacks can lead to serious consequences over time. So stay tuned as we explain what these attacks are and how you can identify and avoid them.

What is a dust attack?

Dust attacks refer to large schemes that work with small amounts of crypto. These small amounts of crypto are known as dust. Bad actors send these tiny untraceable amounts of crypto to hundreds and thousands of wallet addresses in hopes of uncovering the true identity of the wallet holder.

These quantities are so small that users do not even know they have been dusted. They continue to use the wallet to send and receive money, including the dust amounts. The attackers can then track these transactions, de-anonymize users and breach their privacy. And with KYC details becoming mandatory across the world, such attacks could reveal vital personal data.

They can also uncover any other wallet addresses associated with the person. Then, armed with all this information, they can orchestrate serious attacks on the individual. These may include elaborate phishing attacks or online blackmail threats. In some rare cases, users with large crypto holdings may also be physically targeted, or their loved ones kidnapped for ransom.

What is dust?

Dust attacks get their name from the small amounts of crypto known as dust. In the case of Bitcoin, dust usually refers to a few hundred satoshi. Remember that one satoshi equals 0.00000001 BTC. The term derives from the small amounts of crypto residues in a wallet after executing trades, like dust residues.

Is it hard to identify crypto dust attacks?

If you track the transactions in your wallet regularly, dust attacks are easy to spot. You have to investigate any crypto that flows into your wallet, especially unsolicited transactions with strange amounts as low as 0.000001 BTC. However, it is almost impossible to detect these small amounts of crypto if you are not actively tracking your transactions. This is because they do not cause a noticeable change in your wallet balance.

How to stop dust attacks from causing anything further?

The easiest way to ensure that dust attacks don’t add up is to use a hierarchical-deterministic (HD) wallet. These wallets generate a new public key for each transaction. This way, even if you trade the amount of dust, it will be from a different address, making it impossible to trace back to you.

New and upgraded wallets often come equipped with solid protection against these attacks. The wallet will often flag the dust transaction from malicious actors as suspicious. Some wallets also allow you to mark certain deposits as “do not use”. Once marked, these amounts will not be included in future transactions.

Other tips include using a VPN or proxy network on your system, which makes it difficult for someone to trace your identity. Some exchanges allow you to convert dust in your account to their native currency, such as BNB.

Conclusion

Crypto-dusting attacks are insignificant amounts of crypto-assets sent to the wallets of thousands of wallet users. The real goal of this attack is to reveal the identity of the users and steal personal data to launch new attacks or steal money from them in the future. However, cryptodusting attacks can be easily prevented if the user is alert and uses the right prevention techniques.