Blockchain technology and cryptocurrencies are almost inherently associated with anonymity. When sending or receiving funds, participants’ personal data is not recorded, only the addresses of their wallets and the amount transferred. But even this information can be hidden thanks to certain anonymous blockchain protocols such as XRM. Nevertheless, fraudulent technologies are developing no less rapidly, creating ever newer threats to the crypto community.
In this piece we will look at what crypto dust is, how it affects the functioning of your wallet, and also discuss what risks it may create for your digital assets.
What is Dust?
Dust in the cryptocurrency world is a tiny fraction of coins or tokens, which typically possess a monetary value that is lower than the amount of the transaction fee.
Let’s take Bitcoin as an example. The smallest unit of currency is 1 satoshi (0.00000001 BTC), while the minimum number of coins that can be sent in a transaction is 547 Satoshi, i.e. 0.00000547 BTC, meaning the several hundred satoshi up to this limit are considered dust.
Dust can accumulate after transactions where errors were made in rounding or calculating the transaction fee. This minute amount is not exchangeable, but some exchanges allow you to convert it into your own token for further use and withdrawal of the asset.
Most digital asset holders simply ignore dust and don’t pay attention to the decreases or increases of this tiny amount in their accounts. At the same time, an excess of dust on an individual’s wallet may lead to an increase in the cost of future outgoing transactions or even signal the threat of the risk of your wallet being compromised.
How is the Transaction Fee Calculated?
In order to get a better understanding of just how the abundance of dust on a wallet can affect the cost of your future outgoing transactions, let’s take a look at how the transaction fee is formed on the BTC network.
The cost of sending a transaction on the Bitcoin network directly depends on two factors: the size of the transaction in bytes and the current network fee, while the amount that you transfer, in practice, does not affect the transaction fee that you will have to pay.
The balance of any BTC wallet is the amount of unspent receipts (inputs) that are already recorded in blocks. When sending funds to another wallet (output), the transaction size required to write to a new block is formed depending on the number of inputs involved when compiling the required amount. Accordingly, the more numerous and smaller the receipts, the more information will be required to record a new transaction.
In turn, the network’s fee is determined by the total number of transaction requests at a given moment. As you know, miners receive a reward for mining a new block and a network fee for carrying out transactions included in this block. Transactions with a large set reward are carried out faster, since they are of greater interest and benefit to miners who support the functioning of the network.
In general terms, the following formula best describes how the transfer fee is formed:
transaction data * network fee = transaction fee
What is a Dusting Attack?
A dusting attack is the most negative scenario that the accumulation of dust on your wallet can lead to. At its essence, it represents the malicious spread of dust to a large number of addresses and, consequently, the “dusting” of wallets of potential victims by hackers.
Next, the attackers monitor the further circulation of these funds and all transactions to link the addresses to one another, identify patterns, and ultimately pinpoint companies or individuals who own “dusty” wallets.
Scammers can use the information they receive in various ways like blackmail or to create targeted phishing attacks in order to steal the victim’s assets.
How Exactly Does De-Anonymization Occur During a Dusting Attack?
In layman’s terms, de-anonymization via a dusting attack typically follows the pattern mentioned below:
- Dust is sent to the crypto wallets of potential victims;
- Wallet owners “mix” the dust with their fixed assets;
- These “dusty” funds are then used for transactions;
- If such a transfer is processed by a centralized platform that isn’t connected to the blockchain it takes the confidential data of the sender into storage, which attackers begin to hunt for.
How to Find Out If You’ve Fallen Victim to a Dusting Attack?
You should check your wallet balance and transaction history more often. If you notice that a small number of coins or tokens have appeared on your account, which cannot be spent or withdrawn, you may have been the victim of a “dusting” campaign.
Holders of coins with a monitoring tag such as Stellar (XLM) and XRP can easily understand if their data is being stolen, because along with the “dust,” the tag will contain an ad with a link to a third-party resource.
How Does GoMining Help Fight Against Crypto Dust?
It goes without saying that we’re not talking about the threat of a dusting attack for users withdrawing funds from the GoMining platform. However, for the convenience of users, they can manage the minimum amount of deposits in order to ensure the maximum efficiency of their external wallet.
This can be done via daily mining rewards and performance pool payouts that initially go to the user’s virtual BTC wallet on the platform. Furthermore, GoMining customers can freely withdraw their assets to any storage that supports the Bitcoin protocol.
To prevent the dusting of their external wallets and subsequent spike in the cost of outgoing transactions in the future, GoMining users can independently set a withdrawal threshold to ensure the receipt of assets in a quantity sufficient to work with.
You can manage the minimum withdrawal threshold via the app menu, using the “Reward settings” button. And you can also learn more about the types of BTC wallets available, as well as how to choose the right format based on your needs in our previous publication.
