Ledger wallet upgrade can prevent ‘dusting attacks’

Hardware wallet maker Ledger has recently upgraded its software suite to include more privacy and control over crypto transfers to help prevent ‘dusting attacks’.

A dusting attack is where a malicious actor sends small amounts of Bitcoin to a wallet to break the privacy of users for further attacks.

Ledger Live version 2.11.1 introduces a new feature called Coin Control which gives users the ability to adjust transaction settings to include more privacy or optimal fee usage.

The announcement added that the feature works through its ability to manage Hierarchical Deterministic (HD) wallets, or multiple different Bitcoin addresses. Now, users can select the addresses they want to use for transactions using Coin Control instead of the previous default First-in, First-out (FIFO) method of automatically using the oldest address.

This matters because it prevents third parties tracking those transactions through tiny amounts of BTC, called dust, which are worth less than the transaction fees. This dust can be used to trace the identity of the owner through analysis since these tiny unspent transaction outputs (UTXOs) can accumulate. A large scale dusting attack was carried out on Litecoin users in August 2019.

Ledger stated that with Coin Control, users can simply choose to not use this tiny UTXO, adding;

“As such, they cannot track any movements. In short: it can be a game changer when it comes to your privacy.”

Other features on the software upgrade include an optimization of the network fee structure by allowing users to choose UTXOs with higher value, thus reducing the byte size of the transaction. It also has the ability to select specific addresses for transfers should there be a need to keep payments separated.

Reddit users applauded the upgrade with one adding;

“This will make dust attacks useless. Also having the ability not to include small inputs when fees are high is great. I've been waiting for this feature. Thumbs up!”

Others asked for more functionality such as the addition of TOR, which is open-source software that facilitates anonymous communications. The addition of personal nodes was also requested as some users have trust issues when using a centralized company like Ledger.