What Is Bitcoin Dust?

The current Bitcoin algorithm works in such a way that it is almost inevitable that during each transaction, the data is "fractured" into components that at some point (especially with small amounts transacted) are reduced to a "dust" state, forming parts of Bitcoin that are already unprofitable to spend, since the transaction fee exceeds their cost.

In order to get rid of dust, users must combine all "unspent transaction outputs" (UTXO) into one outgoing transaction. At the same time, it is necessary to understand that Bitcoins are stored in a wallet not in the form of separate coins but in the form of "unspent outputs," or the remnants of previously sent or received transactions. Thus, 1 Bitcoin can represent a sum of 0.1 BTC, 0.5 BTC, 0.2 BTC, and other smaller components and so on up to the "dust" level. The process of combining these parts into one transaction can be represented in the form of an exchange of a handful of pennies and five cent and ten cent coins for one dollar bill. The functionality needed to detect and eliminate dust, however, is not present in every wallet.