New Hardware Wallet Feature Fends Off Bitcoin Dusting Attacks

First-in, first-out is a standard accounting practice in which the oldest assets are the first to be sold. Hardware wallet company Ledger says that could be harmful when applied to crypto storage.

Ledger, maker of the Nano S and Nano X, has updated its Ledger Live software, which helps users manage crypto stored on their devices, to include Coin Control. Now, Ledger users can determine which of their Bitcoin addresses to use when making transactions, rather than automatically using the oldest coins in their wallet.

That’s important for privacy, Ledger says, because it prevents others from tracking your identity through the use of dust. Bitcoin dust is a minuscule amount of BTC worth less than the transaction fees to send it. (Think about a credit card transaction of just a few cents.)  

Some gladly pay the fees, however. Blockchain analytics firms or investigators may send dust to certain addresses because if recipients sweep this dust up with the rest of their Bitcoin and/or spend it, they provide valuable clues to their identity.

Which is why Ledger says you now don’t have to touch those tiny “unspent transaction outputs,” known as UTXO. (It hasn’t yet figured out how to let users consolidate the dust or clean their wallets while also maintaining their privacy.)

Ledger pointed to two additional benefits of Coin Control: If users do want to spend those UTXO and clean out their wallet, they can choose more valuable ones, thereby saving money on network fees. Users can also designate specific addresses for certain purposes, akin to how a freelance worker might maintain separate bank accounts for work and personal expenses.

The feature is available for Bitcoin and Bitcoin derivatives as part of Ledger Live version 2.11.1, which went live Tuesday, September 15.