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What is crypto dust and why should you care

What is Crypto Dust?
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What is cryptocurrency dust?

Dust, as the name suggests, refers to small amounts of trace crypto that are considered too small to send in a transaction because the amount is smaller than the network mining fee. Dust is found on most public blockchains, including Bitcoin, Litecoin and Bitcoin Cash.

Currently, most bitcoin wallets are designed to cap transactions at 546 satoshis/sats (0.00000546 BTC). As you will see below, recent drive-by dusting has been sending 547 sats (approx 18 cents at the time of writing) to active addresses.

Cryptocurrencies like bitcoin have unique properties making them public, open, immutable and censorship-resistant. One consequence of this is that anyone can create a valid transaction and broadcast it to the network. A bitcoin public address, as the name suggests, is the address that is recorded on the public blockchain when you send or receive transactions. This means your address is in the public domain and anyone can use it to send you some bitcoin. You might be wondering why someone would send you a small amount of bitcoin and why this would ever be a problem.

 

Why would someone want to send dust?

To fill block space and attack the Bitcoin network

Sending a lot of small spam transactions creates more demand for limited block space which results in increasing the fees users pay for faster confirmation. One of the main functions of bitcoin transaction fees are to disincentivise this behaviour, but dusting transactions are still used as an attempt to attack the network and bring inconvenience to regular users. For example, during the 2015 block size debate, which resulted in the Bitcoin and Bitcoin Cash hard fork, the now defunct mining pool known as CoinWallet began filling blocks with small transactions. This was theorised to have been an attack on the network to bolster support for the fork.

Spam advertising

Sending dust to thousands of addresses can start to add up to a sizable amount of bitcoin. Recently, we have seen Bitcoin SV ( BSV) spam targeting the bitcoin network. The spammer uses vanity addresses to send a message. The message reads “Lets use full power of anonymity see memo.sv/topic/hmwyda”. The link takes you to a BSV forum, but it’s unclear of the exact intention. This specific transaction sent 1.35 BTC to 210 addresses, with one address receiving most of the bitcoin and then further propagating the spam to more addresses.
The remaining bitcoin is currently sitting in an address unconfirmed. This is likely because of bitcoin core rules around limits on the length and size of unconfirmed transaction chains that are allowed in the mempool (25 transactions).

Output/Receivers Crypto Records

To deanonymise users

Analytics companies or law enforcement may also use this technique to deanonymise users and their (possibly multiple) wallet addresses. When the dust is consolidated with the user’s other funds and later sent as a transaction, it helps with chain analytics by making it easier to cluster addresses and tie different addresses to the same user. According to Coindesk, Chainalysis and CipherTrace both denied using dusting, but it was suggested that Investigators and exchanges may use it as a technique to track stolen funds.

What is a bitcoin dusting attack?

As mentioned, a bitcoin dusting attack is when someone sends a small amount of bitcoin to a large number of target wallets. These wallets can belong to individuals or companies and the goal of the attacker is to link wallets using a combined analysis and deanonymise the wallet owner. Criminals may then use this knowledge to their advantage as part of other attacks such as phishing scams and cyber extortion.

How to mitigate dust attacks?

Some practical steps you can take if you get dusted:

  1. Don’t move the dust funds
    If users don’t consolidate the unspent transactions (UTXOs), then they don’t need to worry about the dust UTXOs. They can just leave them alone. Most wallets will automatically consolidate UTXOs when a user creates a transaction so it can be difficult to choose which UTXOs to spend manually. Some wallets can help with this. For example, Samourai and Bitcoin Core, allow you to freeze specific UTXOs, which would stop them from being consolidated in a new transaction.

  2. Create a new address for each transaction.
    Using a HD Wallet, or Hierarchical Deterministic wallet allows you to create a new address for each transaction you make, greatly improving your financial privacy.
  3. Ignore it
    If it is a spam attack, like the example above, you may just want to ignore it.

Conclusion

Dust can slow down network transactions, but the bitcoin network is robust and antifragile so these dusting events will only serve to strengthen the network in the future. For a wallet owner, dust can create a nuisance and a privacy concern. Thankfully if you’re concerned there are some simple steps you can take to mitigate it. Dust spam attacks are also getting more expensive and this is likely to reduce the amount we see in the future.

 

For a deeper dive, read this article by Jameson Lopp:


https://blog.lopp.net/history-bitcoin-transaction-dust-spam-storms/

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Bryan

Bryan

Based in Ireland, Bryan is the founder and CEO of Boinnex. He has worked for almost a decade as an IT Project Manager contracting across finance, banking, insurance, tech, and healthcare industries. He found his way into the crypto space in 2017 when he started a contract role with IOHK — the dev company behind the Cardano blockchain. Since then, he has continued to be actively involved in different projects in the crypto and blockchain space. He enjoys learning, writing, and sharing knowledge about all things crypto.

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