Bitcoin dust cleaning and why it is important

What is bitcoin dust? Well, you cannot imagine the fact that software can become dusty, right? Well, bitcoin dust refers to small amounts of the coin that cannot be sent or used and as such remains in the wallet addresses for almost ever. When transacting using bitcoin, it is a sure thing that most wallet addresses will never be empty. Bitcoin wallet balances can rarely get to 0btc. Usually, wallet balances, even when the owner seems to not have any money left in them, still have 0.0000000002384btc and the likes in them. These kinds of funds cannot be sent to another wallet simply because they cannot even cover the transaction fees alone. So what happens to these kinds of funds? Well, they remain there in the wallets and blockchain logs them and they form a sort of clog in the bitcoin blockchain. This is why they are called bitcoin dust. These funds are not usable, sellable nor transferable.
Usually, before now, bitcoin transactions are free and there is no miner’s fee paid. During those times, the bitcoin dust was no problem simply because any amount of BTC can be transferred. So take, for instance, if you have 100 wallets and you have 0.0000000002384btc in each, you can simply send from 99 wallets into a single wallet and have a sum that is meaningful and useful. One must not forget the fact that those days, bitcoin was not so valuable as it is now and as such, transferring these small bits of BTC into a single account may actually bring your BTC into a wallet then, but everything may still be less than a penny. Nowadays, bitcoin has a huge value, between $5000 and $20,000, but now, it is virtually impossible to transfer such a tiny amount from 99 wallets into a single wallet simply because of the miners or transaction fee. Because it becomes more difficult to mine bitcoin, the cost of mining keeps skyrocketing and so people keep looking for a way to decrease the bitcoin transaction fees so that the dust in the system can be cleaned.
It must be noted that some bitcoin wallet providers are already helping the matter by providing users with SPV (Simplified Payment Verification) which does not require lots of data to confirm transactions. One of such wallets is the company Electrum. Electrum does not only make bitcoin transactions move faster but then they help clear bitcoin dust from wallets. How they do this is by allowing users to send out bitcoin from several bitcoin addresses where bitcoin dust could have held. When all these addresses have been selected, a user can then click on “send from” and all the dust are packed together for sending to a receiver. In as much as the collective dust and bitcoin found in all the addresses is enough to take care of the miner’s fee, the transaction will be completed. The blockchain wallet also allows this particular feature and this helps clear backlogged dust from wallet addresses in these wallets.
There are several other companies outside the bitcoin wallet providers who are working towards bitcoin dust eradication at all cost and these companies have broken-through in so many angles. One such company is the Lightning Network which happens not to be on the blockchain and is only interested in submitting and processing micro bitcoin payments and transactions. Micro bitcoin payments that may later constitute a lot of dust clogging up the bitcoin system are processed by this company as a bulk transaction. See it more like having several pennies and picking each up to form a $100.

One thing must be noted though, the elimination of bitcoin dust according to Greg Slepak, a crypto developer, may affect the privacy and anonymity of the wallet owner. This is because when trying to eliminate dust, which, spreads across several wallet addresses, the identity of the address owner may be revealed eventually. When a person is trying to eliminate dust by combining all addresses with dust, if the owner happens to have completed and verified his/her KYC for one of the addresses in the accumulator, then the identity of the person is no longer hidden. The KYC on one of the wallet addresses containing the dust will reveal the owner of the account who is trying to combine all his wallets to eliminate dust.
According to Erhardt, The new bitcoin algorithm created by Andrew Chau and Mark Erhardt called “branch and bound” is a more efficient way to reduce dust without waiting on bitcoin wallet address providers before grouping and eliminating dust from various bitcoin wallet addresses. This algorithm is more economical in grouping data in terms of fees and scalability. The algorithm makes sure that the exact amount of money in BTC that the sender wants to send out is what it sends and it ensures that when this happens, the fees associated eliminate dust to the bearable minimum. This means that bitcoin users can now transact safely without the fear of transactions getting reduced to dust almost every time because of the miner’s fee.
Even though crypto dust or bitcoin dust was not a problem before now, the dust became a serious problem when fees became higher than the dust transactions and also, when it became unprofitable for miners to verify dust transactions. It is now left for bitcoin and other crypto users to eliminate the dust they have created from several transactions over time by themselves as these dust slow down transactions in the blockchain.
It is therefore imperative to be sure that any mode of bitcoin dust reduction you want to make use of must first be checked for the privacy of the accounts from which the transactions are made. If your privacy is breached in a way or the other, it is best to have dust than to remain in the public eye when transacting in the crypto-world. Be sure to remain private at all times and your transaction as anonymous as you can have them. In the crypto world, security first, then every other thing comes after.

Leave a Reply

Your email address will not be published. Required fields are marked *