What is Dust Attack?
A dust attack refers to a new type of malicious activity where hackers and scammers attempt to obtain the confidential information of Bitcoin and cryptocurrency users by sending tiny amounts of coins to their personal wallets. Many Bitcoin experts operate under the assumption that their anonymity is well protected from attempts to penetrate their transactions, but unfortunately this is not the case.
Dust Definition
In cryptocurrency parlance, the term dust refers to a tiny amount of coins or tokens, such a small amount that people tend to ignore it. Using Bitcoin as an example, the smallest unit of currency is 1 satoshi (0.00000001 BTC), and we can call a couple hundred satoshis dust.
In other words, dust is a tiny transaction or amount that is not even worth sending because it is much less than the transaction fee. On cryptocurrency exchanges, dust refers to a tiny amount of coins that are “stuck” and cannot be traded.
Most people don't pay attention to the dust in their wallet and rarely worry about its origin. Until recently, it was completely normal to not pay attention to these tiny amounts in your wallets, but with the advent of dust attacks, we can no longer say that.
Dust attack
Scammers have recently realized that Bitcoin users don't pay much attention to these tiny amounts appearing in their wallets, so they have started spreading the dust to a large number of addresses by sending them multiple satoshis. They then began tracking these funds and all transactions of these dusty wallets, which allowed them to link addresses and ultimately identify the companies or individuals behind these addresses. This knowledge can then be used to create spear phishing or “I know who you are, pay me and I won’t reveal your identity” attacks on unknowing victims. Initially, dust attacks were carried out using Bitcoin, but they also occur with other cryptocurrencies that operate on top of a public and transparent blockchain.
At the end of October 2018, the developers of the Bitcoin wallet Samourai announced that some of their users had been attacked. The company sent out a tweet warning its users and explaining how they can protect themselves. To protect its users from dust attacks, the wallet now offers real-time alerts to track dust, as well as a “Do Not Spend” feature that allows users to flag these suspicious funds and avoid using them in future transactions.
If the dust does not spread further, attackers cannot establish the connection they need to “de-anonymize” the users of that wallet or address owner. The Samourai wallet already has the ability to automatically report transactions below the 546 satoshi limit, which provides a certain level of protection. This limit is automatically adjusted by the software based on current market conditions.
Bitcoin Pseudonymity
Because Bitcoin is open and decentralized, anyone can create a wallet and connect to the network without providing any personal information. Although all Bitcoin transactions are public and traceable, it is not always easy to determine the identity behind each public address or transaction, and this is what makes Bitcoin somewhat private, but not completely private.
Peer-to-peer (P2P) transactions that occur between two parties (without any intermediary) are more likely to remain anonymous. Please note that Bitcoin users should only use each wallet address once to maintain their privacy.
However, most experts and cryptocurrency traders use third-party exchanges and will end up having their personal wallets linked to their exchange wallets, and thus linked to their personal information. Therefore, if you are into cryptocurrency trading, it is important to choose a reliable and secure exchange.
Therefore, you need to keep in mind that unlike many others, as for some reason many people believe, Bitcoin is not an anonymous cryptocurrency. In addition to the recently created dusty attacks, there are many companies, research labs and government agencies that are conducting analyzes on the blockchain in search of ways to de-anonymize it.
Other Privacy and Security Issues
While the Bitcoin blockchain is nearly impossible to hack, wallets are the weak link in the cryptocurrency chain. Since users do not provide their personal information when creating an account, they will not be able to prove theft if some hacker gets access to their coins, and even if they can, it will be useless.
In fact, trying to track down Bitcoin theft is a pretty pointless endeavor for the victim of this crime. If you keep your bitcoins in your personal wallet that only you have access to, you act as your own bank and there is nothing you can do if you lose your keys or have your coins stolen.
Privacy becomes more and more valuable every day. Not only for those who have something to hide, but for all of us. This is even more valuable for cryptocurrency traders and investors.
Along with dust and other deanonymization attacks, you should also be wary of other security threats that are developing very quickly in the cryptocurrency space, such as Cryptojacking, Ransomware and Phishing. Additionally, you should consider installing a VPN on all your devices, along with a reliable antivirus. Also, be sure to encrypt your wallets and store your keys in encrypted folders.
