Just two days ago (08/10/2019) several Litecoin wallets became victims of a new form of cryptocurrency attack called a dusting attack. By sending a small number of noticeable coins into a wallet, hackers can attempt to track your transactions. By doing this, hackers can try to link the clues and deduce your private information. Tracking is possible because Bitcoin, Litecoin and many other coins, are public blockchains which keep transactions transparent.
Hackers can use this information to blackmail, for example, they could say “Send me Bitcoin or I will reveal who you are”. Other attacks may include targeted phishing attacks or more. However, it is important to keep in mind that if these small amounts are not moved, the whole attack fails.
Graphics by Binance showing how “dust” (in red) can spread and affect all of your active addresses (blue)
As mentioned, dusting attack can happen on any coin that runs on a public blockchain such as Bitcoin or Litecoin as their transactions can be tracked. You might think Bitcoin wallets are created anonymously anyways. Even though you are tracked, there aren’t any private information to lose. However, wallet addresses in exchanges are a different story. On several exchanges, KYC is often done and if you do not use a trustworthy exchange, your information may leak following a dusting attack. While blockchain can be used to enhance our privacy, attacks like these are using the advantages of blockchain to de-anonymize us.
While it is not very worrying if you are using a hardware wallet as there are no private information stored, it is more important to choose which exchange you use carefully. Only use exchanges that are proven to be safe and do not keep coins on exchanges for too long. It is also good not to use the same email addresses on every exchange that you use and always log in on trusted devices that are protected from Phishing. Lastly, to protect you from any kinds of hacking that intend to steal your coins, use a true air-gapped hardware wallet like the ELLIPAL.
If you are currently using an ELLIPAL and received some dust, we got solutions for you. Firstly, if your address is used solely for storage, there is nothing to worry about. As long as your coins stay in one place and not sent to an untrusted exchange, nothing can be tracked. However, if you want to get rid of this dust, you can convert all of the coins in the affected address to another currency through our built-in Changelly exchange. Changelly will receive all of your dusted coins and send you another currency free of dust. You can, of course, convert it back again but this time make sure to create a new address and delete the affected one.