Crypto Dusting Attacks And How To Avoid Them

By CNBCTV18.com Aug 12, 2022, 07:55 AM IST (Published)

Blockchain and crypto attacks have gradually increased over the last few years. This month alone, exploits on Solana wallets and the Nomad Bridge resulted in losses worth millions of dollars. Miscreants are also employing different schemes to exploit projects and trick users. One of these methods is known as a dusting attack.

While it may sound ominous, these attacks do not attempt to steal your funds. Instead, they are used by miscreants to track users and plan further exploits. Therefore, while they may not cause any immediate threat, dusting attacks can lead to severe repercussions over time. So, tag along as we explain what these attacks are, and how you can identify and avoid them.

What is a dusting attack?

Dusting attacks refer to large-scale schemes that work with minuscule amounts of crypto. These little amounts of crypto are known as dust. Bad actors send these tiny untraceable amounts of crypto to hundreds and thousands of wallet addresses in the hope of uncovering the real identities of the wallet holder.

These amounts are so small that users do not even know they have been dusted. They carry on using their wallets to send and receive funds, including the dust amounts. The attackers can then track these transactions, deanonymize users, and break their privacy. And with KYC details becoming mandatory worldwide, such attacks can reveal crucial personal data.

They can also uncover any other wallet addresses linked to the individual. Then, armed with all this information, they can orchestrate severe attacks on the individual. These can include elaborate phishing attacks or cyber-extortion threats. In some rare instances, users with large crypto holdings may also be targeted physically, or their loved ones kidnapped for ransom.

What is dust?

Dusting attacks get their name from the small amounts of crypto known as dust. In terms of Bitcoin, dust usually refers to a few hundred satoshi. Keep in mind that one satoshi equals 0.00000001 BTC. The term originated from the tiny amounts of crypto leftover in a wallet after executing trades, like dust residues.

Is it difficult to identify crypto dust attacks?

If you track the transactions of your wallet regularly, spotting dusting attacks is easy. You are bound to investigate any crypto flowing into your wallet, especially uncalled-for transactions with strange amounts as low as 0.000001 BTC. However, spotting these tiny amounts of crypto is next to impossible if you do not actively track your transactions. This is because they do not cause a noticeable change in your wallet’s balance.

How to stop dusting attacks from leading to anything further?

The easiest way to ensure dusting attacks do not amount to anything further would be to use a hierarchical-deterministic (HD) wallet. These wallets generate a new public key for every transaction. This way, even if you transact with the dust amount, it would be from another 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 spend.” Once labelled, these amounts will not be included in future transactions.

Other tips include using VPN or proxy networks on your system, making it difficult for anyone to track your identity. Some exchanges allow you to convert dust in your account into 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 objective of this attack is to unmask the identity of the users and steal personal data to launch fresh attacks or rob money from them in the future. However, crypto dusting attacks can be easily prevented if the user is alert and uses the proper prevention techniques.