Topic: Dust Attack, what it is, why it is dangerous and how to prevent falling to it - page 3. (Read 1951 times)

I know this topic is old and has been revived yesterday by someone, but I just found it and I can relate to it. My XRP, LTC, BTC, BCH, ETH and DASH addresses have all received dust transactions from an unknown address. I've never done KYC anywhere, nor are my addresses linked to my real identity in any way. Is there anything I must do? Some of them MIGHT be empty, but I'm not entirely sure.

Now, after reading the last part of the thread posted by the OP, I have another theory: governments may be conducting this process of blockchain analyzing in order to find the identity of a person for money laundering and tax evasion purposes.

I'm using Ledger by the way.

exactly my point.
they can not identify you by only using "dust attack" technique that you explained here. for example someone can have 2 addresses both not-linked to his identity. first one that is empty receives dust then he links it to the second one, there still is no way of linking these two to his identity. similarly the another person may have 2 addresses both linked to his identity, the empty one receives dust and he links it to the other one. no additional privacy was lost here.

This is a lot more likely than theory of topic author.
I mean it have actual money reason to do that, and privacy concern? I didnt get it, and tried really hard of what topic author wrote.
Its too far fetched for me, privacy is not affected here.

They shoot in the mass.
They are not targeting at you. Just shooting in the mass and hoping to fish something.

Maybe this dusting is more of a spam attack, it creates new unspent outputs that are more expensive to move than they are worth, so it can make people overpay fees

exactly my point.
they can not identify you by only using "dust attack" technique that you explained here. for example someone can have 2 addresses both not-linked to his identity. first one that is empty receives dust then he links it to the second one, there still is no way of linking these two to his identity. similarly the another person may have 2 addresses both linked to his identity, the empty one receives dust and he links it to the other one. no additional privacy was lost here.

snip

exactly my point.

Bitcoin it is not an anonymous protocol, but a pseudonymous. If an exchange gives you a few satoshi and you consolidate those with your bitcoin stash, they are perfectly able to link your KYC'd addresses to the pseudonymous one. Same thing if they send dust to an empty address and if you send to a KYC'd address (or an address "touched" with a KYC'd one). This is what the sentence ion bold meant.

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This is nice.
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this bold part is misleading because nobody can "trace your identity" this way, specially not by using blockchain analysis alone. all they can do is linking the different addresses if they weren't linked before only when the user consolidates the inputs in one transaction. and an address is not revealing the identity of the user on its own.

The attacker sends satoshi to a used but empty address. The receiver then aggregates those satoshi to a new address by making a payment. At that point the old address and the new one are "linked" and the attacker can, with methods of chain analysis, try to trace your identity, having discovered, however, that you also have control of the old address.

A few days agor I read this news, that got my attention:


LITECOIN WALLETS HIT BY LARGE-SCALE DUSTING ATTACK, SO WHAT IS IT?

Here you can find a couple of paragraph:


Dust therefore refers to those amounts of cryptocurrencies that cannot be transferred individually either or because their amount is less than the transaction fees of the blockchain, or because they are lower than the minimum transferable out of an exchange, thus remaining blocked in the portfolio of the account at a specific exchange.


Here you can find an video from  Binance Academy that explains what a Dust Attack is:

What Is a Dusting Attack?

This technique is also used on Bitcoin, so try to be careful when you receive Satoshi without knowing where they are coming from.

Why is dust attack dangerous? What is the use of sending satoshi to trace transactions if the transactions are actually public?

Well the explanations can be multiple:

• The attacker sends satoshi to a used address, with a positive balance. Curious mechanism, in reality the attacker does not get any advantage, given that the movements of the address could also be monitored previously. The only advantage could be to "accustom" the user to receive funds on an address, thus making it less prudent in the real dust attack.
• The attacker sends satoshi to a used but empty address. The receiver then aggregates those satoshi to a new address by making a payment. At that point the old address and the new one are "linked" and the attacker can, with methods of chain analysis, try to trace your identity, having discovered, however, that you also have control of the old address.
• The attacker sets up a bitcoin faucet (or a bitcoin fork - do you remember United Bitcoin?), where it is possible to get some satoshi upon registration with an email. At that point, if you combine those satoshi with your main address, well, the attacker has extra starting data to identify you (an email, even if fake, provides a lot of information, for example a connection IP).
• Extremizing: an exchange that offers you $ 30 to register, after KYC, is practically performing a dust attack. Except that in that case, using the chain analysis company you just bought, you can perform a very efficient tracking of your UTXOs. Do you think this is an impossible scenario? it already happened.
• Exaggerating 2: an exchange (the same as the previous point) offers you $ 80 in shitcoins by answering easy videos and questions, after KYC, is practically performing a dust attack. Except that in that case, using the chain analysis company you just bought, you can perform a very efficient tracking of your UTXOs. Do you think this is an impossible scenario? It is happening now.
  
  

So, what to do when you receive dust on your wallet?

Two cases:

• Attacker sent you on a positive balance address: there's nothing much you can do about that. The address is public, the balance is public, having dust on such address is not something you can control. Spending this dust does not pose any additional threat than moving your coins on that address. You can consolidate those coins and keep with your usual life.
  
• Attacker sent you on a zero balance address: this is a proper dust attack. The address is public, built it is not possible to link to your current address. Spending this together with your coins poses a privacy risks. The attacker doesn't know anything about your current address, if you spend the two UTXO together they are able to link them.
  For this reason you have to use Coin Control feature: clearly mark that dust UTXO as "do not spend" (many wallet allow for this, Wasabi being one of those) to that attacker cannot track you down.

Another example is the exchange airdop made by our government friendly exchange:

Let's work an example out.
They give you some Stellar Lumens, provided you see some videos.
Of course you don't care about XLM's, so once you get them you sell them immediately for BTC.
Since you are an advanced BTC user, you know that "not your keys not your Bitcoin", so you get your BTC and witdraw them  in your private wallet.
You froget it for a few weeks.
Two months later, taking advantage of the empty mempool, you decide to consolidate your addresses into one. You then put those few satoshi together with your 100 BTC you bought back in 2010.
Well, now the shrewd chain analytics company is able to understand that even the 100 BTC are yours.
The chain analytics company sells the information to the tax authorities, and you're screwed.
Or sell it to a criminal organization, and you're even more screwed.

How to defend yourself:
Two tips immediately come to mind:

• Keep the "kyc" and "anonymous" addresses absolutely separate, many wallets allow different UTXOs to be marked with different labels: use this option!
• If you really need to consolidate the addresses, before doing so, let them go through a coinjoin. However, having an anonymous set is not perfect, but at least you don't have an obvious link to your address.
  

As usual I will try to update this thread by completing it with better information and examples as they become available.
I look forward to your comments!

True that, i had an idiot hand me a thumb drive to put something on for him that he found on the ground. Damn thats the oldest trick in the book.

Social engineering is a good part of any attack.