What is a dust attack
Today we will talk about this type of fraud in the cryptocurrency world, which is called a dust attack or Dusting Attack. You will learn how it works and how it can be used against you.
This scam owes its name to the actions of attackers. They send their potential victims tiny amounts of coins to their wallets and these “pennies” are dust. Usually this trifle seems to be the remainder of another amount that has already been transferred.
The amounts are so small that wallet owners often ignore them, but after a while it turns out that all the assets have disappeared from the wallet. But how can attackers find out the identity of the owner and his wallet data with a simple transfer?
How a dust attack undermines anonymity
To answer this question, we need to look a little deeper how the Bitcoin transaction works. Bitcoin is an open and decentralized network in which everyone can participate by creating an address. There is no need to provide personal data in order to establish the address at which the owner can receive and send coins.
Although transactions can be viewed by everyone, identifying participants is not possible. And this is quite true if the holder of the currency each time creates a new address for a new transaction and does not use it anywhere else.
But most users in one way or another associate their blockchain addresses with their exchange accounts – and this gives attackers a loophole by which to track the identity of the owner. If this happens, you can wait for a targeted phishing attack or pay requests to maintain your anonymity. For this reason, wallets exist on the Bitcoin network as an additional privacy feature.
Bitcoin wallets and what you need to know about them
Bitcoin wallets can generate hundreds of different addresses and manage them simultaneously. A wallet generates several private keys and addresses using a seed phrase – a sequence of several different words, usually 12 or 24.
With these words, deterministic wallets can receive a large number of private keys. That is, each time you use the wallet, a new address is generated to receive the transaction, and after that this address is received by UTXO.
UTXO – one of the key concepts of bitcoin
UTXO – short for ‘Unspent Transaction Output’, is one of the key concepts of Bitcoin. However, very few are familiar with this term. Therefore, let’s understand in more detail. UTXO can be imagined as a banknote or coin. When you make transactions, as a result, coins (UTXO) of different denominations accumulate in your wallet.
This, in fact, is an ordinary change, only digital. Since the wallet has an infinite number of addresses – they all store just such a ‘change’. Each address has a different UTXO, and it is almost impossible to understand that these addresses are somehow connected.
But the goal of the Dusting Attack is to find out just that. An attacker is trying to create a directory in which all the addresses managed by your wallet will be recorded. If he succeeds, he can easily track your actions on the blockchain. The wallet privacy feature will no longer work. But how exactly does an attacker manage to create such a directory using a dust attack?
How Dusting Attack Works
To undermine the protection provided by the wallet, the attacker sends UTXO to one of the addresses. As explained above, these are usually very small amounts, which are therefore also called dust and are often ignored by the recipient. And here the fun begins.
Often, to pay for transactions, the system uses UTXO as an asset. Since the amount at one address is too small – the wallet combines different UTXOs with each other to increase the amount. It also uses different addresses where the corresponding UTXOs are stored. Thus, the wallet creates a transaction through several inputs from different addresses.
A few coins that the scammer sent earlier will also be used as UTXO, which means that he just needs to wait until the wallet user pays for the transaction using “change” from different addresses. From this moment, all addresses used are monitored, which will ultimately lead to the disclosure of the whole address network.
And declassification of the owner’s personality is already a matter of time. Registering on a cryptocurrency exchange requires a lot of personal data. Therefore, when money transactions begin between addresses on the blockchain and a wallet on the exchange, an attacker can establish a direct connection between them.
So, today we found out what a dust attack is and how it works. It is impossible to fully defend oneself against these malicious acts, although developments are being made every day to prevent such situations.
Until they are implemented, it is recommended to track sudden small amounts that appear from nowhere and store the bulk of their assets in hardware wallets.