A crypto dusting attack is described as a malicious activity where a criminal sends small amounts of crypto or digital assets to many addresses trying to compromise the privacy and security of the recipients.
In that context, the term ‘dusting’ describes the small amount of cryptocurrency that is sent, which is often less than the transaction fee needed to complete the transfer.
The main aim of a dusting attack is to connect a specific wallet address to the real-world identity of the owner or someone who uses that address. This can be done using complex data analysis strategies to identify the patterns and associations that exist between wallet addresses and a lot of other personal information, including phone numbers, email addresses, and even social media profiles.
After the hacker has managed to link a specific wallet address to the real-world identity of the owner, they can use the information to launch more attacks, including phishing scams, identity theft, and many other sham activities.
To protect yourself against dusting attacks, it is important to utilize strong privacy practices and ensure that you avoid sharing personal information online. Moreover, users need to be careful whenever they receive small amounts of crypto from mysterious sources since such transactions might be part of a dusting attack.
Related: AMLSafe: The Dusting Attack Risks for Crypto Wallets are Resolved
Blockchain technology is pseudonymous, which means that owners of a crypto address are not defined names or any other personal data. Nevertheless, the blockchain ledger is traceable and transparent. Hence, all transactions are visible to everybody, and a user’s activity can be determined by following the history of that particular address.
When the attackers transfer dust to crypto wallets, they aim to invade the privacy of the owners and track down their funds when they send them from one address to the next. The attacker’s goal is not to steal crypto but instead, it is to associate the target address with other crypto addresses. This may result in identifying the victim via off-blockchain hacking activity.
A crypto dusting attack can happen in most of the public blockchains, including Litecoin, Bitcoin, and Dogecoin. A dusting attack strives to connect the attacked addresses and wallets to the personal data of their related firms or individuals and use the information to target their victims, either via elaborate cyberextortion threats, phishing scams, identity theft, or blackmail to make a profit.
Are All Dusting Attacks Crypto Scams?
It is not in all cases that crypto dust transferred to a particular wallet is a scam. Dusting can be used for other different reasons apart from hacking activities.
Governments use this strategy to connect a particular crypto address to a person or an organization and detect various criminal activities, including terrorist threats, tax evasion, money laundering, and a lot more to guarantee regulatory safety and compliance.
Developers also use the dusting technique to stress test their software. This testing activity extends beyond limits to determine the massiveness of the software and other features like network scalability, transaction processing speed, and security protocols. This helps identify possible problems and vulnerabilities in the software, letting developers improve its security and performance.
Crypto traders receive dust from trades, and it is not considered an attack. Most exchanges offer users the opportunity to swap small amounts of crypto for their native tokens to use in future trades or other cryptos with a low transaction fee.
How A Dusting Attack Works
Criminals rely on the fact that crypto users do not even notice they got tiny amounts of cryptos in their wallet addresses.
It is possible to track down transaction movements that might help identify wallet owners since blockchains work with transparency and traceability. For a dust attack to be highly effective, the wallet owner needs to combine the crypto dust with other funds in the same wallet and then use it in other transactions.
By featuring small amounts of crypto in many other transactions, the victim of the dusting attack may unknowingly send the dust to off-blockchain centralized organizations. Since centralized platforms have to comply with Know Your Customer (KYC) regulations, they have the personal data of the victim, who might then become vulnerable to cyber extortion threats, phishing, blackmailing, and many other targeted attacks off the blockchain targeting to steal sensitive information.
The crypto addresses that are highly vulnerable to dusting attacks are the UTXO-based addresses that are often used in different blockchains, mostly Litecoin, Bitcoin, and Dash since they all generate a new address for every change that remains from every transaction. UTXO prevents cases of double-spending and is an unspent transaction output that remains mainly after a transaction gets executed and can be utilized as input on other transactions.
Related: How To Minimize Security Risks Linked With Crypto Payments
The crypto dust from many addresses can be spent on other transactions. By detecting the origin of funds from these dust attacks, the Criminals can utilize advanced technological tools to track a thread to determine the victim’s identity.
A traditional dusting attack cannot help criminals access users’ money or steal their cryptocurrency assets. But, hackers are quickly becoming sophisticated and they are using advanced tools to trick wallet holders into phishing sites and steal their funds.
A clear indicator of a dusting attack in a wallet is the abrupt appearance of small amounts of extra crypto unsuitable for withdrawing and spending.
While it is not expected for crypto users to become victims of dusting attacks, they need to take multiple steps to protect themselves against these kinds of crypto attacks.