Simply put, bitcoin dust means very small amounts of bitcoin. When we refer to “bitcoin dust,” we mean those small amounts of bitcoin that can be left over on a bitcoin address or bitcoin wallet.
Example Of Bitcoin Dust
If you have a bitcoin wallet with 0.00000012 BTC (or 12 satoshis) it would be seen as bitcoin dust. There is no clear rule or standard what is considered bitcoin dust and what isn’t.
However, as a rule of thumb, if the amount is below 500 sats, most people would think of it as bitcoin dust. If the bitcoin price rises in the future, 500 sats could eventually be worth enough to be fairly precious. As the saying goes, one man’s dust is another man’s gold.
What Is The Problem With Bitcoin Dust?
If the leftover is too small, a transaction could be difficult or impossible as the bitcoin blockchain requires fees for a transaction to be confirmed rapidly. Therefore a very tiny amount of bitcoin, the bitcoin dust, is trapped in a wallet or address.
This “bitcoin dust” has only marginal value, as it is worth less than the computing power or fee required to process it. The cost of the fee to process a bitcoin transaction changes depending on the volume of transactions on the network.
Most wallets would show an error message that the amount is too small for a transaction. Another common error notification is “transaction rejected by the network.” This means that your transaction is considered spam and would not be processed if the network is congested.
The Technical Definition Of Bitcoin Dust
As we learned, there is no standardized rule set on the Bitcoin protocol for what is dust and what isn’t. But every bitcoin wallet has a rule or preset for dust. In conclusion: “the definition of dust is client-specific and not a network rule.“
Bitcoin Core is the original wallet (bitcoin client) that is maintained by those developers who also work on the Bitcoin protocol.
“Bitcoin Core considers a transaction output to be dust, when its value is lower than the cost of spending it at the dustRelayFee rate. The default value for dustRelayFee is 3,000 sat/kvB¹, which results in the same dust values as the prior dust definition used before Bitcoin Core 0.15.0. The previous dust definition tied the dust limit to the minRelayTxFee rate and the spending cost of an output exceeding 1/3 of its value.” Source: bitcoin stackexchange
What Is The Fee For Bitcoin Dust?
Every time a bitcoin transaction occurs on the Bitcoin network, one of the steps necessary for the transaction to be processed in a reasonable amount of time is to validate its authenticity.
Bitcoin miners ensure that a transaction is not sent twice and nodes validate each block of transactions on the blockchain. The miners are very important for the security of the Bitcoin network and require a lot of energy.
To reward this effort and make it profitable, miners earn the block reward as well as the transaction fees. There can be times when the transaction fee is higher than the actual amount sent. Dust is a transaction amount where the fee is higher than the transaction cost and no miner would be happy to work for it.
Therefore, the fees for bitcoin dust are the same as for any other amount. Bitcoin transaction fees are measured in sats per byte. Users can estimate the fee with a number of tools, for example mempool.space.
Is it possible to send bitcoin without paying a fee?
So perhaps you are wondering, why are we not just sending the bitcoin dust without paying the mining fee? While it is technically possible to send bitcoin without fee, it is not very convenient and most wallets won’t even allow you to do it. It could also take a long time to get confirmed, or require many attempts as the transaction could time out and bounce back.
Scientific Definition Of Bitcoin Dust
Of course, when it comes to computer science, things can get more complicated. Although the explanations above are not wrong, they are also not fully accurate. As a Bitcoin beginner you might not have the time to study every single detail for many hours. Therefore, easy explanations help you to get started.
But if you are interested to understand bitcoin dust on a scientific level, then you are most welcome to dig in. The more technical definition of bitcoin dust could perhaps be “UTXO set that is uneconomic to include in a transaction.”
We found a good explanation on stack exchange which we will print in full:
“To understand ‘dust’ you must understand a few things:
“Firstly, a UTXO is an unspent transaction output. This is essentially a piece of bitcoin somewhere on the blockchain that is unspent.
“To create a transaction, 1 or more UTXOs are used to form the inputs, and 1 or more UTXOs are “born” in the process. After the transactions are confirmed, the UTXOs that formed the inputs are now just “TXOs” (ie. they’ve been spent).
“To ensure a transaction is confirmed, a fee must be added, that fee is proportional to the overall size of the transaction, which is the number of bytes the transaction takes up on the blockchain. The more UTXOs are used as inputs, the bigger the transaction will be, thus the higher the fee that needs to be paid.
“If I have 1 BTC stored in 1 UTXO, it will cost me less to send that than 1 BTC spread across 10 UTXOs of 0.1 BTC, and it will cost me less to send that than 100 UTXOs of 0.01 BTC.
“The fees are calculated as satoshis per byte, and the fees fluctuate depending on how busy the network is.
Every UTXO you want to use in a transaction will incur an increase in fee.
Every UTXO takes up a number of bytes in the transaction.
If you multiply fee per byte by the number of bytes taken by the UTXO and it exceeds the value held in the UTXO, then this UTXO is said to be ‘dust’.
“So a ‘dust’ UTXO is a UTXO that isn’t worth including in a transaction because to do so would incur a fee increase higher than the value of the UTXO.”
