What do you do with small change? Those small denomination coins that take up too much space in your pocket are often found discarded on the road, as if they were money that didn’t matter. Guess what? Bitcoin has an equivalent and it’s called ‘Bitcoin dust’.
Sometimes, when users send Bitcoin transactions its blockchain protocol needs to generate ‘coins’ that are so small they are virtually worthless, like $0.01. In fact the fees for sending them have a considerably higher value.
There is another problem with this: sending a small amount takes up as much room on the blockchain as a larger transaction and that leads to system performance issues. You could say the ‘dust’ clogs it up.
In the past this wasn’t such a problem for Bitcoin users, but late last year, when Bitcoin’s value skyrocketed, and transaction fees also went up, the smaller value transactions became more expensive. Now, developers claim that it is time we got rid of the ‘dust’. Especially as transaction fees have declined this year.
They also argue that if Bitcoin is more widely used, then it will “be more profitable to move these tiny data pieces while fees are relatively low, especially if a user has collected a lot of them,” decentralised app developer Greg Slepak told Coindesk. And he believes it should be done now, as the right time may not come around again.
How do you remove Bitcoin dust?
According to the expert information, users need to consolidate all their dust transaction outputs into one. However, here is where the problem lies. How can a user identify them? The answer is, it depends on the wallet you use.
Slepak recommends Electrum, a simplified payment verification (SPV) wallet that validates transactions with less data, and is thus commonly used on mobile devices. A user can look for the “change addresses” containing ‘dust’ and then select “send from” to consolidate them all into a single transaction.
If you’re a Coinbase user, you won’t be able to do this, although it has been a massive contributor to getting rid of dust by cleaning its wallet. It won’t be so easy to keep things clean if Bitcoin transactions increase seems to be the expert consensus, suggesting that this is something we should be thinking about today rather than wait for tomorrow.