The tech industry is engaged in a constant arms race. Both sides are trying to fix the problem. This is not always a negative thing. This is how the security industry advances and drives cryptography. It’s important to be aware that the latest attack is subtler and won’t result in anyone directly emptying your Crypto wallet.
What are dusting attacks? What are the problems with them, and what can be done to defend ourselves?
What is a Dusting Attack?
The small amounts of cryptocurrency left behind in your wallet following a transaction are called dust. The transaction fees exceed the value of the transfer, making it impossible to remove these frustrating remains. Bitcoin treats anything below 5000 satoshis as dust. At the current exchange rate, this is about $2.
Chain analysis is used to determine what happened to the funds after they are sent. The villain can track where the funds are going and connect with wallets that they monitor.
It becomes much easier to determine who is the owner of a wallet once enough links are established. Blockchain analysis firms are busy creating maps of wallet owners. Like I said, this is also of interest to law enforcement and tax authorities – all the baddies!
It is a particular problem when you transfer your bitcoins to an exchange which associates the wallet address with your KYC data. Know your Customer If you’ve ever posted a receiving address to receive payment on a site, then you may be at risk.
What are the possible risks?
At this stage, the risks are not catastrophic as the attacker cannot access your wallet or the crypto it contains. However, it sets up further attacks which can be serious. If you’re going to steal something from somebody, it pays to know what they have and where they keep it. The business of thieving comes later, but a knowledge of who owns what is invaluable.
Social Engineering, phishing and Ransomware are the most common threats that follow once a group of criminals knows which wallets and money you have.
Anonymity vs Pseudonymity
The blockchain is totally transparent and contains an auditable list of all the Bitcoin transactions ever made. The wallet addresses, the time, and the amount are all recorded in the ledger. If you give someone your Bitcoin address to transfer you some funds, they can peer into your wallet and see exactly what you have spent and received since the wallet was created.
Bitcoin is not anonymous. However, you don’t have to provide any data in order to set up a wallet. We can look into each wallet but (easily!) we are unable to connect it with an individual. This is called pseudonymity.
What can I do to protect myself from dust?
Whenever you receive small amounts of unsolicited cryptocurrency from someone you don’t know, you should leave it alone. Don’t touch it. Either Just let it sit in your wallet, or delete that address and never use it again. As long as you don’t forward it anywhere, the hackers can’t monitor where it goes, obviously.
It is best to create a new receive address with each transaction. It isn’t always possible to do this, particularly if your business accepts crypto payments. This makes managing your wallets a nightmare. It is more likely that you will lose your cryptocurrency than to be attacked by dust.
Was asked if we ever ran out of Bitcoin addresses? No. If you estimate 100 billion people using Bitcoin over the next 100 years (12 times as many humans as exist today), they could each have 1,461,501,637,330,900,000,000,000,000,000,000,000 addresses. About a trillion stars are in the universe. It’s time to move on.
A second potential danger is Smart Contracts. You can access a smart contract by clicking confirm in your DeFi wallet. You could invite villains into your wallet if you do not know where the smart contract came from. Deal only with well-established ‘Blue Chip DeFi’ companies that are reputable and have not been hacked.
A recent scam on Binance smart chain also included in the note a web address as well as a message telling you that you’re missing out on unclaimed cryptocurrency. Don’t fall for it again. No one is offering free crypto. This is a scam. You should be able to avoid them if you follow the same internet safety guidelines that you use for your regular online activities. Other maxims include “There is no free lunch” and “If something looks too good for it to be true then it most likely is.”
The confidence tricksters prey on their victims’ greed. Do not be greedy.
The Summary of Thoughts
Most of the threat at the moment comes from subsequent traditional phishing or social engineering attacks. The dusting attacks merely confirm the identity of the target and what can be stolen. This could change, however. Smart contracts are a powerful technology that has not yet been stress-tested in the wild. This makes them super-vulnerable to attacks from bad actors.
We have already seen malicious code in smart contracts that steals from wallets. DeFi wallets have been questioned over the Unlimited Allowance problem. There’s no way to predict which vulnerability will be discovered next. However, it is interesting to see that successful dusting attacks require an old-fashioned approach of social engineering.
Each potential threat in the real world is first identified, then addressed. The process is repeated as new threats are created. This is an important part of ‘s decentralized Blockchain technology. We are stronger when we don’t die, which is why it’s important to embrace challenges and take lessons from them. Crypto becomes safer over time.
