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.

[LFC_Bitcoin]

This has been happening for many years. It’s a common, low IQ scam attempt. The attacker will send you cents with the hope that one day you’re being lazy or not concentrating and you copy and paste what you think is an address that you have control over to send Bitcoin to but you make a grave error and send to their address. It probably doesn’t catch out many people but there are some dumb enough to fall foul to this type of attack.

[PrivacyG]

- 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?

You can see an example for how multiple UTXO spending helps with linking identity here,
https://bitcointalk.org/index.php?topic=5394559.0

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

All of us are at risk all the time.

- 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.  Bitcoin can not be refused!

[Iranus]

- 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?

In fact, you spent dust and attacker automatically will get your identity, that's not the case. Attacker must first have some opportunity to create an on chain linkage. That is, your address must be linked to your real identity through some other information sooner or later.

- 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 would say, it is possible. But it is not necessary to consider it an inevitable rite of passage for Bitcoin. You know, due to increase in transaction fee and the fact that it is less economical for attacker, dusting in Bitcoin has now decreased a lot compared to before. So if you get a few tiny incoming transaction then it cannot be called a targeted attack for sure, but you still need to be aware of 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.

In fact, there is no way in Bitcoin where user can reject incoming payment below $5. We only control the address but in blockchain it is never possible to filter who will send UTXO to our address. Maximum we can do is ignore incoming dust.

[Richbased]

This has been happening for many years. It’s a common, low IQ scam attempt. The attacker will send you cents with the hope that one day you’re being lazy or not concentrating and you copy and paste what you think is an address that you have control over to send Bitcoin to but you make a grave error and send to their address. It probably doesn’t catch out many people but there are some dumb enough to fall foul to this type of attack.

Yeah, it is called address poisoning and this type of scam happened a lot in trust wallet before people started discovering it and stopped using the wallet. I doubt if anyone that has been in the crypto industry for a long time will fall to such scam method. It's mostly relative newbies that falls for this kind of scam but for an old timer, it happens rarely. This is why it is good to do a crosscheck of the receiving addresses before sending coins.

[DanWalker]

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

In addition to Dust, you should also be aware of address poisoning.

Sometime attacker can identify addresses that you use frequently. Then they create vanity addresses that match the first and last few letters of those addresses. That is, with Tiny Transaction attacker can insert his own vanity address into your transaction history that looks like an address you know. So that later you copy that vanity address and send a large amount.

[Alphakilo]

- 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.

Fortunately, Trezor users can stop these dust transactions by opening the coin control tab, try to locate those dust amounts and freeze them. Once that's done, such dust transactions would be ignored whenever funds are being sent in the future and that stops any further dust transactions in its path totally.