This article will delve into the concepts of Bitcoin dust, the associated risks, and the significance of UTXOs (Unspent Transaction Outputs). Additionally, we will explore how users can protect themselves.

Bitcoin dust represents minuscule amounts of unspent bitcoin in a transaction that falls below the minimum limit required for processing. This leftover amount, trapped in a wallet or address, poses challenges to transaction validation. Bitcoin dust, can also involve small cryptocurrency amounts sent to numerous wallet addresses. This can either be benevolent or potentially malicious.

Transactions on the Bitcoin network demand validation through mining, with miners earning fees for their service. Bitcoin dust arises when the mining fee exceeds the actual transaction value, rendering the transaction impossible.

As transaction sizes increase due to more Unspent Transaction Outputs (UTXOs), the associated mining fees escalate. This phenomenon renders very small Bitcoin amounts impractical for transactions, creating Bitcoin dust.

Beyond transaction issues, Bitcoin dust introduces risks of de-anonymization. Hackers utilize dust attacks, sending minute amounts of Bitcoin to trace and exploit users. Managing Bitcoin dust becomes a balance between transaction efficiency and privacy.

The Bitcoin network imposes a minimum UTXO size for different address types. This 'dust limit' sets a boundary on the smallest UTXO you can effectively extract and split, safeguarding against dust attacks. Notably, distinct UTXO size requirements exist for different Bitcoin address types:

Dust may be cleaned up by performing manual coin selection via coin control, which lets users select specific coins (UTXOs) to spend in a transaction. By combining multiple tiny UTXOs, a larger transaction input can be created, covering the transaction amount and fees. This technique is referred to as ‘consolidation’.

Please note that this is a complex process, and users should be well aware of the risks involved.