DEFI and NFTs are two of the most exiting sectors within the wider crypto space. Everyone wants a piece of the emerging crypto pie. While blockchain technology that underpins cryptocurrencies is difficult to wrap your head around, there are fundamental things that can help you take the first step. One of those is a web3 wallet.
A Web 3 wallet is a tool for accessing the web3.0 economy, loosely described as the latest iteration of the web where users enjoy much greater control over their data and privacy, and can extract utility and value, rather than that allow that to be harvested by tech giants like Google or Facebook.
Given the importance of control and anonymity a web3.0 wallet is non-custodial. It means you can store digital assets securely without needing to trust a third party, which means you don't need you to complete daunting KYC/AML processes, preserving your privacy and anonymity.
On the flip-side, it requires you to take ultimate responsibility for the safekeeping of those assets via something called a recovery Seed, which will be explained in the practical steps below.
There are already plenty of non-custodial crypto wallets on the market but web3.0 offers a completely different user experience more aligned with desktop applications than mobile, because the interactions are too complex for a small screen.
Web3.0 wallets are an ideal gateway to a whole host of crypto applications running on blockchains - like Decentralized Finance (DeFi), Gaming, Non-Fungible Tokens (NFTs) - that are best accessed and interacted with via a desktop browser, as processes often run in the background, with your browser sharing activity notifications. One of the most popular web3.0 wallets is MetaMask.
MetaMask is a non-custodial browser and mobile crypto wallet primarily serving the Ethereum ecosystem, though it can also be used to access other blockchains by configuring them within the wallet.
Being non-custodial, it allows users to protect their identity but interact seamlessly with Ethereum based applications. It allows users to send and store cryptocurrencies that follow the Ethereum common format, known as ERC-20, and make transactions by default to any Ethereum address.
Security is managed through a recovery Seed - common to all non-custodial wallets - while individual private keys are stored locally within your Browser's data store.
MetaMask recently surpassed 21 million monthly active users, with exponential yearly growth (x38 from 2020 to 2021) driven by the growth in NFTs and DEFI. This growth is set to continue as MetaMask is the leading brand in the web3.0 wallet category.
The wallet provides users with:
MetaMask can be used as an app or as a browser extension or plugin. Anyone can download it on a mobile phone or install it on a computer like any add-on. We're going to look at each separately, breaking down the set-up process & functions.
Go to the Chrome or Firefox web store and search for “MetaMask”. Download the extension and activate it within Chrome, make sure to choose the official version; it will show over 10 million users.
You can also use MetaMask with any Chromium-based browser, in other words any open-source browser that is based on Chrome code, which includes the Brave Browser.
Click on 'Get Started'. For most users this will mean following the ‘Create a wallet’ prompt. However, if you already have an ERC20 wallet you can import an existing wallet it at this point.
You’ll be asked to create a password, make sure it is strong, and ideally not used anywhere else. The password enables you to access the wallet on a day-to-day basis.
Next you'll be asked to create a recovery Seed, which is a crucial step of your browser wallet set-up. If you lose access to your computer or Google/Firefox account, this is the only way to recover all the funds. You need to record your seed phrase and store it offline. If you write it on paper laminate it or store in a water-proof wallet. Do not store it online.
With your MetaMask wallet set up, you now have an Account with an Ethereum address to receive/send Ethereum based tokens. You can click on the three dots to give your account a specific name under 'Account Details' which also allows you to copy/paste your address or Scan from a mobile as a QR code.
Use those address details to receive Ethereum based tokens. Once they are received you'll get a browser notification and they will appear in the Assets list below, with the associated transactions under the 'Activity' tab.
Any tokens not automatically supported can be manually created, so long as they are ERC20 based, by scrolling down and using the 'Import Tokens' option.
You can also use the Send function to send funds to any other Ethereum wallet. The transactions will appear in the 'Activity' tab. Click on ‘Send’, select the token you wish to send, and then add the recipient address.
Keep in mind that you’d have to pay the gas fee for sending tokens. You'll be offered three options differing by speed/cost, choose which ever makes sense based on the urgency of the transaction.
You can create multiple accounts, which you can access by clicking on your account icon sitting on the top right corner.
With your MetaMask wallet active you can visit the websites of dApps and DEFI protocols and connect, using your wallet, sharing nothing more than your Ethereum address. You'll see an interface that will allow you to approve transactions, and all such connections will be available within your wallet.
One very useful feature MetaMask supports is ENS domains, which can act as proxies for the long and difficult to remember Ethereum addresses. That way your address is replaced with simple domain such as yourname.eth, which can be used to receive funds.
If you don't have any Ethereum based tokens you can use the buy function within the wallet. Using your bank/credit card you can use Wyre to purchase crypto which will be deposited it directly into your account.
You can also swap tokens you already have by sending them to your wallet address and using the ShapeShift integration to swap them.
To swap tokens, click on ‘Swap’. Select the tokens you’d like to swap but be aware of the associated gas fee. The app version of Metamask doesn’t allow you to swap tokens directly. Instead, you need to search for a third-party app in the browser extension of mobile apps. .
MetaMask by default uses the Ethereum network to send and receive transactions, but you can also choose to use other blockchain networks to move funds.
At the top of your browser wallet you'll see a dropdown menu currently set to ‘Ethereum Mainnet’. Select this to add a different next such Binance Smart Chain. You'll simply need to provide three pieces of information - The Network Name, a new RPC URL and the Chain ID (see the image below).
MetaMask has great functionality but being a hot wallet - online by default - does mean your funds are exposed to potential risks. One way to mitigate that threat is to connect your MetaMask wallet to your hardware wallet, if you own one.
You simply need to connect your hardware wallet as normal, then log in to your MetaMask browser wallet, click on the round account icon in the top right and choose 'Connect Hardware Wallet' from the menu. You will be prompted to choose either a Ledger or Trezor device (others are not supported at this time).
MetaMask is also available as a mobile app though it has limited functionality by comparison to the browser-based version. Here are the steps to use the wallet as an app:
Though MetaMask is a really useful tool, be aware that there are some risks associated with using it.
Web3.0 wallets are powerful tools for interacting with new digital economies where you are in control. The era of tech giants treating you as a product could soon be a thing of the past, and the key to that transition are tools, like MetaMask, that allow you to seamlessly interact with dApps, NFT marketplaces and DEFI protocols without needing to go through a 3rd party. If you are using a web3.0 wallet now, you almost certainly will in the next few years as they are set to become a key feature of all of our digital lives.