As the crypto industry is growing gradually, the digital payment system is transforming with it-lower transaction fees, quicker borderless transfers, and no intermediaries.
But, the incidences of cyber attacks are also increasing as hackers are deploying sophisticated techniques. In August 2019, one of the crypto attacks came into the picture when most of the Binance users who have Litecoin (LTC) get duped by a Litecoin dusting attack after receiving an extremely small amount of LTC from an unknown source. A similar incidence was noticed with Bitcoin owners in 2018.
You may find it strange- how can free crypto coins be strange or a form of attack? What is a crypto dusting attack? Is it a threat and needs to be mitigated? In this article, you are going to learn about crypto dusting attacks.
What Is A Crypto Dusting Attack?
A crypto dusting attack takes place when an unidentified source or malicious attacker sends an extremely tiny amount (known as “crypto dust”) of cryptocurrency (generally Bitcoins or popular altcoins) to hundreds of different crypto wallet public addresses.
Attackers then track the transactional activities of these wallets for the combined analysis to identify the company or individual owner of these crypto wallets (targeting anonymity!). The dusting attack is a kind of malicious activity that aims to break the barriers of maintaining the privacy of Bitcoin and other cryptocurrencies.
Dusting attack is not a direct and immediate threat but it is the strategy to steal a heavy amount of digital assets from a huge number of digital wallets. If the red flag situation is noticed at the appropriate time and that minuscule funds are not transferred anywhere from the wallet, then the repercussions of the attack can easily be mitigated. But, ignoring the small gift of free cryptos can prove to be explosive.
Purpose of “Dusting Attack” | Crypto Dusting Attack
Most of the attacks or scams are focussed on stealing cryptocurrency or computing power to mine assets. On the contrary, crypto dusting targets the “anonymity” to have the big game win and ultimately steal the funds, data, addresses, and also the transactional history.
Other reasons for the attack could be:
- Groundwork for a phishing or extortion attempt: By tracking the address of the wallets, scammers tend to uncover the identity behind a number of crypto wallet addresses and tend to make a mark for phishing attacks.
- Cheap marketing gimmick: Sometimes the transfer of a small number of cryptos turns out to be a cheap marketing technique, which is even deployed by reputed crypto exchanges at one or the other time.
Ultimately the purpose of every crypto attack is stealing the cryptos in one or the other way which must be mitigated within the time frame with a number of techniques available.
Infamous Binance-Litecoin Dusting Attack
On August 10, 2018, one of the reputed crypto exchanges Binance announced that fifty of the Binance-Litecoin addresses had received 0.00000546 LTC in their crypto wallets from an unknown source address.
The team of Binance became aware and started looking into the transaction path of the source wallet. After investigation, it was noticed that more than 3,00,000 addresses were affected (LTC users majorly). The attack affected the complete network especially the Binance users with active Litecoin addresses.
When the investigation was completed, it turned out that one of the Russian mining pool companies wanted to advertise their services to Litecoin users which was interpreted as the Binance dusting attack. But, generally, this is not the purpose in the majority of cases but a few of the attacks were meant for advertisement like that dusting attack on Litecoin.
How Can You Protect Yourself From Crypto Dusting Attacks?
Crypto dusting attacks can easily be avoided by taking cautious measures as mentioned:
- Track every small transaction of your crypto wallet and if found suspicious then mark it as “Do Not Spend” and confirm the transaction source from the particular crypto exchange
- To be fully confirmed that your wallet address won’t be tracked, you can change your wallet address for your transactions or can also utilize the obfuscating technology like that of Virtual Private Network (VPN) to hide your transactions. You can surely not stop anyone from sending dust to your account but can ruin the purpose of the attack
- Crypto wallets can be chosen with special features to maintain high-end anonymity. For instance, some of the wallets use the hierarchical deterministic model and generate different public addresses for every transaction making the traceability of the wallet’s address practically impossible
- You can utilize the various previous features to block the view of attackers. For instance, Using the Lightning network of Litecoin to send the transactions which are off-chain and cannot be monitored
Thus crypto dusting attacks might be difficult to stop but choosing the crypto wallets cautiously, keeping track of the history of transactions, and using the different addresses for transactions can be helpful in mitigating the consequences of attacks.
Blockchain technology-based cryptocurrency is almost impossible to disrupt but as the new technologies are coming up with the new techniques, scammers and hackers are leaving no stone unturned to steal the digital assets of the crypto enthusiasts.
Privacy and security are two of the major concerns which are seriously discussed in the crypto community and exchanges are already working to ensure the issue- a free experience for users.
Dusting attacks with no direct impacts are taken care of seriously along with threats of ransomware, phishing, crypto-jacking, and many others. But as the industry will grow more, the issues related to security will be addressed by the companies particularly involving in the maintenance of a secured network.
The crypto space is still in the nascent stage so the investors must self educate themselves also rather than completely depending on crypto exchanges or wallet providers.
I hope crypto dusting attacks won’t dust your account and even if it dusts, you might not get into the trap!