Dusting attack

A dusting attack exploits the UTXO model used by chains such as Bitcoin or Litecoin, where a balance is a set of separate unspent outputs. When someone transacts, the wallet groups several UTXOs to cover the amount plus the fee. If they spend the received dust together with other funds, they combine that UTXO with the rest and generate on-chain evidence that the attacker uses to correlate addresses and deanonymize the holder.

The defensive key is simple: the attack only works if the dust moves. As long as the dust stays unspent and isolated, it cannot be linked. As good practice, mark those UTXOs as "do not spend" using coin-control wallets such as Sparrow, Electrum or Wasabi, which let you exclude the dust manually. Hierarchical deterministic wallets, which generate a fresh address per transaction, also reduce the surface for correlation.