As the world continues embracing cryptocurrency in every sector, so do the risks. One malicious tactic that is a growing concern for token holders and traders is the crypto dusting attack.
These phishing scams have affected hundreds of thousands of addresses and every user is vulnerable to dusting attacks. Join us as we unravel the mystery of this criminal activity and how you can protect yourself from becoming a victim.
We will look at crypto dusting attacks, how hackers deploy a dusting attack, and how individuals or groups can protect their transactions against future attacks.
What Is a Crypto Dusting Attack?
A crypto dusting attack involves sending small amounts of crypto called dust to a large number of wallet addresses which are hardly noticed by owners of the wallets.
However, hackers monitor the transactions and try to uncover the crypto wallet's address from the movement of dust. This method is used to reveal the identity of token holders and steal their crypto assets.
Dusting can be used on BTC, BNB Chain, and Litecoin, they can also affect cryptocurrencies that have trackable public addresses. The main objective associated with dusting attacks is to connect wallet addresses to companies or individuals, thus exposing them to blackmail or phishing attacks.
How Dusting Attacks Work
Dusting attacks can be used to steal crypto from numerous wallet addresses in blockchain technology. Here is how a dusting attack transaction works:
- Dust Distribution: The attacker sends tiny amounts of cryptocurrency to multiple wallets that are below the transaction fee to avoid suspicion from the owner.
- Transaction Monitoring: After the crypto dust is transferred, the hacker waits and monitors the actions of the user. If the owner unknowingly performs a regular transaction, the attacker monitors the movement of the dust across several wallets with the help of blockchain analytics tools.
3: Linking Wallets: Through comprehensive analysis, the attacker tries to categorize wallets based on their transactions and finally links the attacked addresses to real-world identities.
This attack is dangerous to decentralized exchanges (DEXs) and personal wallets that do not perform KYC verification. Before registering on an exchange, make sure you comply with Know Your Customer (KYC) verification to keep your account safe.
Real-Life Examples of Dusting Attacks
A real-life example of this attack was executed on users of Samourai Wallet in 2018. This attack was conducted by sending small amounts of cryptocurrency like Bitcoin to many addresses sometimes even hundreds of thousands of addresses in a bid to deanonymize the owners.
Another example of using dusting was done on the BNB Chain in 2020. The attackers sent dust to wallet addresses and tricked wallet holders into phishing sites to steal their crypto.
How to Avoid Dusting Attack
Although dusting attacks are typically complex, owners of crypto holdings can avoid these criminal activities by following these safety precautions:
- Use Hierarchical Deterministic (HD) Wallets: HD wallets generate new addresses for random transactions in your wallet. This will make it hard for hackers to connect wallet addresses with benevolent owners.
- Monitor and Mark Dust Transactions: Some wallets like Trust Wallet and Samourai Wallet allow owners to mark suspicious crypto dust transferred into their accounts as "Do Not Spend" so that it will not be used for future transactions on the blockchain ledger.
- Avoid Transacting Dust: If you have noticed small amounts of crypto in your wallet that weren't done by you, do not move them. Avoiding the dust will stop the attacker from getting your identity.
- Convert Dust: In some exchanges, dust is often converted to tradable tokens. This helps users to consolidate their small balances without exposing their identities or privacy.
For more practical steps on avoiding this attack on blockchains like Bitcoin, Watch this step-by-step YouTube guide on How to Prevent Dusting Attacks in Crypto
Common Wallet Problems in The Blockchain
Digital wallets are very important for controlling cryptocurrencies and they come with several weaknesses that can lead to hacking and thefts. Here are the most popular vulnerabilities of crypto wallets:
- Private Key Exposure: Private keys are essential for accessing and managing digital assets. If the private key of a user is known via malware or phishing, attackers can easily have access to their wallet and transfer the funds. To avoid this common problem, always use hardware wallets or store your private keys in formats that are encrypted.
- Phishing Attacks: Users can be deceived into exposing their wallet information via phishing sites, links, or airdrops of free cryptocurrency. These attacks often copy real wallet providers or exchanges thereby tricking users into putting their private information on scam websites. Be sure to confirm the website URLs and have two-factor authentication enabled to avoid becoming a victim.
- Software Vulnerabilities: Outdated software wallets usually have weaknesses that can be exploited by hackers. Use wallets that are reputable for strong security and constantly updating them can help you prevent these attacks.
- Malware and Keyloggers: Malware is specifically designed to access users' money and steal their crypto. For example, Keyloggers can capture important information like passwords or private keys. Go for software that is trusted and restrain from performing suspicious downloads.
- Lack of Two-Factor Authentication (2FA): A lot of wallets do not have 2FA features and this can give attackers easy access to your wallet. Always go for popular wallets like Binance or Coinbase that offer extra security and 2FA.
- Weak Passwords and Poor Backup Practices: Weak passwords can make a wallet vulnerable to strong attacks or permanent loss if the wallet is compromised. Ensure you use strong, complicated passwords, and have backup options like encrypted USBs or cloud storage.
- Hot Wallets: These are wallets that are constantly linked to the internet and they are more prone to security breaches and hacks when compared to wallets that are stored offline (cold wallets). Opting for cold wallets when it comes to long-term storage and hot wallets for frequent transactions can help lower your chances of getting attacked online.
- Dusting Attacks: A dusting attack is an attack that is used to reveal the identity of wallet owners by sending tiny crypto amounts and monitoring subsequent transactions. Restraining from conducting transactions with dust can mitigate this problem.
Conclusion
Crypto dusting attacks are usually ignored because they rarely happen but they are a serious problem to public blockchains. Attackers can use dusting attacks in a wallet and steal users' funds.
However, this issue can be avoided by marking suspicious transactions, constantly monitoring, and using HD wallets. Keep in mind that some companies use dusting attacks for research purposes while others use it for tax evasion.
To be on the safe side and not be a victim of experiments or attacks, always protect your details and stay updated with the latest trends and security because knowledge is your best defense.
FAQs
What is the purpose of a dusting attack?
Through tracking minor transactions, connecting wallet addresses, and perhaps disclosing the owner's identity, dusting attacks seek to deanonymize cryptocurrency users.
Can dusting attacks steal my cryptocurrency?
Dusting attacks can expose your wallet to more dangerous threats like phishing or extortion, even though they don't directly steal cryptocurrency.
How do I know if I’ve been dusted?
You can look through your wallet for small, unexpected transactions. To assist users with spotting dusting attempts, a lot of wallets also provide alerts for anomalous activities.
Are dusting attacks common?
As more people use cryptocurrencies, such assaults are growing more common. They have been observed on several blockchains, such as BNB, Litecoin, and Bitcoin.
