Some questions about dust transactions

[MegaAkker]

Hey people,

This topic is about Bitcoin btw.
I never really noticed because I am a HODL'er and don't transact much, but it seems over the past 2 years I have received 5 times tiny dust amounts in my Trezor hardware wallet ranging from 20 to 30 dollarcents. At first I didn't know what it was but I have done some research and I know a lot more now, but I still have some questions remaining:

- I know I can use coin control to never send those dust amounts together with my other funds, but hypothetically if I would not use coin control and just send my whole wallet funds at once to a different address, what exactly am I risking? I read that it could possibly give away my identity, but HOW?

- is it true that almost anybody with large BTC holdings will at some point receive some dust amounts?

- does anybody know if Trezor has an option to automatically reject payments below a certain amount (for example 5 USD)? I know I can hide transactions below a self-entered amount, but I am now talking about simply not receiving them at all. I guess this is not possible but still asking to know for sure.

[SatoPrincess]

- I know I can use coin control to never send those dust amounts together with my other funds, but hypothetically if I would not use coin control and just send my whole wallet funds at once to a different address, what exactly am I risking? I read that it could possibly give away my identity, but HOW?

I’d suggest you follow these steps to protect your identity while using coin control feature:

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.

- is it true that almost anybody with large BTC holdings will at some point receive some dust amounts?

Probably true. Which is why I recommend you read this thread so you have a better understanding of how to protect yourself from dust attacks: Dust Attack, what it is, why it is dangerous and how to prevent falling to it

- does anybody know if Trezor has an option to automatically reject payments below a certain amount (for example 5 USD)? I know I can hide transactions below a self-entered amount, but I am now talking about simply not receiving them at all. I guess this is not possible but still asking to know for sure.

No, Trezor can’t restrict incoming deposits below a certain amount. AFAIK, there isn’t any non-custodial wallet that can do that.

[Cookdata]

- I know I can use coin control to never send those dust amounts together with my other funds, but hypothetically if I would not use coin control and just send my whole wallet funds at once to a different address, what exactly am I risking? I read that it could possibly give away my identity, but HOW?

The risk is your privacy, if you consolidate all your Bitcoin received in the past 2 years to a single address without any of the dust, the observer will still guess that you controls those addresses and the transactions.

- is it true that almost anybody with large BTC holdings will at some point receive some dust amounts?

Not all do, but any address with balance can get dust at anytime.

- does anybody know if Trezor has an option to automatically reject payments below a certain amount (for example 5 USD)? I know I can hide transactions below a self-entered amount, but I am now talking about simply not receiving them at all. I guess this is not possible but still asking to know for sure.

I don't think there is any way, you can't control who send Bitcoin to your wallet address, but you can control which coin to spend. If you get dust attack, hide and ignore them.

[Alvin_talk]

- I know I can use coin control to never send those dust amounts together with my other funds, but hypothetically if I would not use coin control and just send my whole wallet funds at once to a different address, what exactly am I risking? I read that it could possibly give away my identity, but HOW?

Just as Cookdata have mentioned, breach of Privacy is the reason. If you mistakenly spend or combine these dust to other coins, you are likely creating a breach between addresses which were previously difficult to link together. Attackers use these information to track how coins are moved and to carry out precise and targeted phishing attacks and other forms of attacks on your wallets, because they now have information of your transactions and addresses.

It doesn't really mean that dusts will immediately compromise your wallet or identity, it just means you are feeding scamers with more information with addition of the ones they already have. That is why it is not advisable to blindly consolidate dust.

[OcTradism]

- does anybody know if Trezor has an option to automatically reject payments below a certain amount (for example 5 USD)? I know I can hide transactions below a self-entered amount, but I am now talking about simply not receiving them at all. I guess this is not possible but still asking to know for sure.

It's using Coin control feature and never touch UTXOs from dust attacks.

Dusting attacks & airdrop scam tokens. It's not only about tokens, but also about Bitcoin dust attacks.

Similarly to a guide for Electrum wallet in a topic above, you can use Coin control feature in Trezor Suite.

Remember that, for privacy, never touch UTXOs from dust attacks.

[Swordsoffreedom]

- I know I can use coin control to never send those dust amounts together with my other funds, but hypothetically if I would not use coin control and just send my whole wallet funds at once to a different address, what exactly am I risking? I read that it could possibly give away my identity, but HOW?

Suppose you already have some BTC in some of your Address. And then attacker sends you a tiny dust UTXO. If you send the entire wallet balance to another address at once and the wallet also take that dust as input, then blockchain analyst will see that your other UTXOs have been spent in the same transaction with dust. That is, a strong heuristic of them being under the same entity/control will be created. This way your different addresses and transaction history can be linked. If any of your addresses has been previously linked to any exchange or KYC record or merchant or other identifiable activity then attacker can eventually reach your real identity through that linkage.