Bitcoin Dusting Attacks Threaten Anonymity of Several Wallets

Nuno Teodoro

Bitcoin wallet service  Samourai Wallet has recently warned its users that they may be targets of a dusting attack.

The announcement was made on the company’s Twitter earlier today.

 

The Samourai team consider themselves to be privacy activists, and deeply committed to maintaining transactional privacy while striving to create the most private bitcoin wallet.

Dusting Attacks

A dusting attack involves a malicious agent sending a small number of satoshis to multiple addresses. The amount sent is so insignificant that it started being referred to as dust, hence “dusting” attack.

When the wallets that receive “dust” make the further transactions, the attackers are able to observe the movement of the funds on the blockchain. By combining transactional data from a wide range of addresses, they are able to link multiple addresses with each other. Doing so makes it possible to identify certain addresses as belonging to a certain person or company.

To mitigate the problem and maintain the anonymity of its users, Samourai Wallet recommends wallet owners activate the coin control feature. This allows users to control how they spend their bitcoins when making a transaction, essentially giving them the opportunity to choose what addresses will be the ones sending the bitcoins and which of the bitcoins you have received will be used.

It is important to note that anyone can be targeted. If you have a bitcoin wallet that has receive a very small number of bitcoin, it is possible that your anonymity might also be in jeopardy.

Financial Privacy and Bitcoin Anonymity

As we progress in the digital age, keeping our personal and financial information anonymous will be of greater value and importance, as it is possible to determine a lot about someone knowing their wealth and spending habits. The problem is that every credit card purchase you make can be monitored by governments. and mobile payment apps like Venmo have recently been shown to publicly reveal all user transactions by default.

Bitcoin granted us the liberty to transact with each other without the need of third party involvement. However, due to its pseudonymous nature, it does not allow full financial privacy as transactions can be traced and linked to individuals or companies through chain analysis techniques. A study from Princeton University has already proved this point,  while BitFury claims to have been able to de-anonymize over 15% of the Bitcoin network.