What is a crypto dusting attack, and how to prevent it at first sign?

What is crypto dust？

Crypto dust is small amounts of

cryptocurrency

sent to a large number of wallet addresses with benevolent or malicious purposes.

Generally, dust is considered the amount of cryptocurrency equal to or lower than a transaction fee. Bitcoin, for example, has a dust limit imposed by Bitcoin Core, the Bitcoin blockchain software, of around 546 satoshis (0.00000546 BTC), the smaller denomination of Bitcoin (BTC). The wallets nodes that apply such a limit may reject transactions equal to or smaller than 546 satoshis.

Dust could also be the small amount of cryptocurrency that remains after a trade as a result of rounding errors or transaction fees and can accumulate over time. That small amount is not tradeable but can be converted into the exchanges native token.

Crypto dust should not pose a significant threat, as it has mainly been used for legitimate rather than malicious purposes. For example, reaching out to wallet holders via dusting can be an alternative advertising method to more traditional mailshots. Dust transactions can contain promotional messages, so dusting is used instead of mailshots.

Despite not being a major concern, crypto users should still know what a dust attack is and take measures to protect themselves should it occur.

What is a crypto dusting attack？

A dusting attack occurs when small amounts of crypto assets, called dust, are sent by malicious actors to multiple wallet addresses — just like dust — scattered across blockchain networks.

Blockchain technology is pseudonymous, meaning that owners of a cryptocurrency address are not defined by their names or any other personal data. However, the blockchain ledger is transparent and traceable; thus, all transactions are visible to everyone, and a users activity can be tracked down following the history of that specific address.

When attackers transfer dust to cryptocurrency wallets, they want to invade the privacy of their owners by tracking down their funds when they move them from one address to another. The attacker‘s goal is not to steal cryptocurrency — as simple dusting won’t allow it — but rather associate the targets address with other addresses that may lead to identifying the victim through off-blockchain hacking activity.

A crypto dusting attack can occur in most public blockchains, including Bitcoin, Litecoin and Dogecoin. A dusting attack aims to link the attacked addresses and wallets to the personal data of their related companies or individuals and use this knowledge against their targets, either through elaborate phishing scams, cyberextortion threats, blackmail or identity theft to make a profit.

Can dusting attacks steal crypto？

A traditional dusting attack cannot be used to access users‘ money and steal their crypto assets. However, hackers’ increasingly sophisticated tools can trick wallet holders into phishing sites and drain their funds.

A traditional dusting attack is used to identify the individuals or groups behind the wallets, deanonymize them, and break their privacy and identity. Such activities cannot steal cryptocurrency directly but are aimed at detecting victims social activities — tracked down through the combination of different addresses — to then blackmail them, for example.

Over time and with the technology‘s new use cases, such as nonfungible tokens (NFT) and decentralized finance (DeFi), attackers have become more sophisticated and have learned to disguise scam tokens as airdrops of free cryptocurrency. The wallet holders can access these appealing free tokens by claiming them from popular NFT projects on phishing sites created by hackers that seem legitimate. Such sites are so similar to the authentic ones that it’s difficult for the average cryptocurrency enthusiast to differentiate one from another.

The phishing sites wont steal usernames and passwords but will convince the victim to connect their wallet to the malicious sites. By granting these phishing sites permission to access their wallets, the unknowing victim enables the hacker to move their funds and NFT assets to their wallets, stealing crypto using harmful lines of code in smart contracts.

Increasingly, dusting attacks occur on browser-based wallets like MetaMask and the Trust wallet, which are primarily used as a getaway to decentralized applications (DApps) and Web3 services. Browser-based wallets are particularly vulnerable to dusting attacks because they are more accessible to the public and can be more easily targeted by hackers or scammers.

How to prevent dusting attacks？

While its unlikely for cryptocurrency users to become victims of dusting episodes, they should still take a few steps to protect themselves against such crypto attacks.

Due to increasingly high transaction fees, especially on the Bitcoin blockchain, its become more expensive for a hacker to launch a crypto dusting attack compared to a few years ago. Still, cryptocurrency users should take a few steps to secure their funds.

Since dusting attacks rely on combining analysis of multiple addresses, if a dust fund is not moved, the attackers cannot track a transaction that doesnt occur to make the connections they need to “deanonymize” the wallets.

Simple measures, including due diligence and education, can go a long way toward tackling these attacks. However, more elaborate methods can also be used to protect a wallets funds, and here are some of the most effective practices available:

• Use privacy tools like The Onion Router (TOR) or a virtual private network (VPN) to increase anonymity and strengthen security.

• Use a hierarchical deterministic (HD) wallet to automatically create a new address for each new transaction, making it difficult for hackers to trace the thread of your transactions.

• Use dust conversion services that automatically swap crypto dust into native tokens to use in future trades.

Taking these steps should help users protect their funds. Nevertheless, cryptocurrency users should be aware of other cyber threats besides dusting and deanonymizing attacks. For instance, ransomware is malware designed to deny a user or organization access to their digital files until a sum of money is paid.

Cryptojacking is a type of cybercrime where a criminal secretly uses a victims computing power to mine cryptocurrency. Cryptocurrency can be useful and efficient technology but can also be at the mercy of malevolent actors who work primarily to steal data and value. This is why users should always use caution and be aware of its risks when dealing with cryptocurrency.