While blockchain technology is deemed to be secure due to its cryptographic roots, the real truth is that several security issues permeate the market. One mysterious but commonly mentioned security issue is dusting attack - a form of offensive red hat strategy performed to deanonymize cryptocurrency wallets and their owners.
Dusting attacks are employed by both criminals and law enforcement agencies for reasons of their own. While one attempts to unmask addresses for nefarious purposes, the other seeks to track down users who used digital assets for illegal reasons. The method is effective when used by both parties, but nevertheless, it is noticeable that fewer attacks are performed as the years go by. However, that does not mean that you will not encounter the average dusting attack once or twice in your crypto career.
In this article, we will not only explain what dusting attacks are, how they work, and how to counteract them. In the end, you will also have the opportunity to discover just how (un)serious dusting attacks are.
A dusting attack is an offensive method used to deanonymize and break the privacy of cryptocurrency users by sending small amounts of crypto to their wallets. The amount of tokens sent is so small that they are barely noticeable. Oftentimes malicious actors will send the same crypto that is already stored in a wallet. Otherwise, it is also common to see token transfers that involve cryptocurrencies with low blockchain network fees.
From the perspective of Bitcoin, any amount that is defined as a satoshi (1 sat = 0.00000001 BTC) is considered to be dust. Receiving anywhere from a couple of sats to a few hundred sats means that you are the victim of a dusting attack.
Do keep in mind that not all dust is the product of a dusting attack. When trading or exchanging tokens, it is common to leave behind the smallest denomination of any token after the trade is executed. So if you find crypto dust of a recently traded token, it is more likely for it to be a byproduct of a trade rather than an attack.
Luckily for everyone, most exchanges have the option to convert dust. As dust cannot be traded since exchanges have a minimum trading size requirement, dust conversion is the easiest way to get rid of small balances.
We have covered the fact that dust is unnoticeable and that it cannot be traded. Malicious actors exploit that fact by sending dust to different addresses in order to ‘track them.’ However, the ultimate goal is to analyze all addresses that received dust and connect the dots by identifying which ones belong to the same wallet.
By doing so, it is possible to track down a person’s identity. This is generally done by discovering small details that are relevant to the target’s identity or by using the original information to blackmail and extort users.
In the cult hit WarGames, a computer AI controlling nukes during the cold war era tells its creator during a dramatic encounter that the only winning move is not to play. The same can be said for dusting attacks, as the main attack vector is found in the act of spending dust and linking it to another wallet owned by the user.
Therefore, the only winning move is not to use the funds at all. This can be counteracted by converting dust into crypto or by flagging these assets and preventing your wallet from using them. Since the latter option is more technical in nature the easiest way to go about it is through conversion. Most popular exchanges such as FTX, Binance, and Gemini offer the feature so there is no need to stress.
As you can see, dusting attacks are not that serious. The process boils down to transferring small amounts of cryptocurrency to various exchanges in order to track transactions and spot which addresses are interconnected.
Even in the chance that you fall prey to a dusting attack and fail to convert it, there is no need to be worried. Dusting attacks are not especially eventful since they boil down to social engineering. Rather than experiencing a technical exploit where your assets can be directly stolen, with dusting attacks you are the fate of your own reaction - which means that you cannot possibly be affected by this as long as you are aware of what is going on.
Has someone connected all your transactions via dust and discovered your real identity through a data leak? Is the same person blackmailing you by sending you a message with your name, implying that he is capable of doing something far more malicious?
Worry not! There are far worse security threats out there (like cryptojacking, ransomware, etc.), and a person on the internet knowing your name is the most negligible security threat of them all! As long as you do not hold the belief that the other person has any form of power, you are good to go.