What is MetaMask

What is a hot wallet

A hot wallet is any cryptocurrency wallet that is constantly online due to its internet connection. With a hot wallet, you can perform cryptocurrency transactions directly through a web browser, which many wallets have built in. This type of wallet differs significantly from cold wallets, which function solely with an internet connection. The main difference is also that cold wallets store private keys offline, which gives them an extra layer of security. That is, hot wallets have certain security gaps. Constant internet connectivity, while it makes them convenient for quick use, also opens the door to potential cyberattacks. However, despite the risk, users often favor hot wallets because of their ease of use and convenience. They are widely used for quick transactions, as well as for interacting with decentralized exchanges and smart contracts, which is actually what makes them so popular.

In fact, in principle, hot wallets have the same degree of security as other types of wallets. However, their risk is often considered in the context of usage patterns. Hot wallet users sign more transactions, including those with various smart contracts, which increases the likelihood of encountering attacks and loss of sensitive data. More often than not, hot wallet users face an increased risk simply because they use these wallets more frequently than other types of wallets. This active interaction with the network and signing multiple transactions increases their vulnerability to potential attacks. Thus, the security issue of hot wallets is often related to the intensity of their use and conscious risk management on the part of users.

You can read more about the types of wallets in our article.

What is MetaMask

MetaMask is a non-custodial hot crypto wallet designed to receive, store and send crypto assets. This wallet is available as an extension for Chrome, Firefox, Edge and Brave browsers and as an app for iOS and Android smartphones. Developed in 2016 by ConsenSys, MetaMask initially supported the Ethereum network and ERC-20 tokens, but has since started working with other blockchains as well. MetaMask interoperates with various Ethereum-based blockchains, including BNB Smart Chain (BSC), Polygon, Harmony, and HECO. Within the app, users can easily create and switch between multiple wallets and networks while managing their assets.

When registering with MetaMask, users are provided with a mnemonic (Seed) phrase that becomes the main password to access the wallet. It is important to realize that tokens are actually stored on the blockchain, and MetaMask is merely a tool to manage these assets. Your mnemonic phrase can also be used in other similar cryptocurrency wallets, giving you flexibility and control over your cryptocurrency assets.

The main functions of the wallet include:

• Making transactions and storing tokens.
• Transferring funds with no limit on the amount.
• Support for working with all decentralized applications (dApp).
• Possibility to buy and sell NFT (non-replaceable tokens).

MetaMask has gained an impeccable reputation without letting users down for all the years of its existence. The number of installations of the application has exceeded 21 million. The basis of the wallet's reliability is the strategy of not storing user data. It is thanks to this that users are protected even in case of attacks on the company's servers. Data security is built around the use of a seed-phrase generated by the wallet itself during registration according to the BIP39 standard. This seed phrase consists of 12 words and is randomly generated. This phrase is stored exclusively on the user's device.

MetaMask functions and features

There are many operations with cryptocurrency available to the user on this platform, including the possibility of passive income from storing it, so let's take a closer look at the wallet's features.

Purchasing cryptocurrency

The easiest way to buy cryptocurrency in the MetaMask app is to purchase it with a card:

• Find the "buy crypto" button.
• Select your country from the list.
• Select your payment method (e.g. Apple Pay or credit card).

• Select which asset you want to purchase.

• Finalize the transaction.

Swap

The swap function allows you to exchange some tokens for other tokens. To perform a swap, you need to:

• Open the wallet app or launch the extension.
• Find the "Swap" button.
• Select the token in your account that you want to swap.
• Select the token you want to purchase.
• Specify the number of tokens you want to receive.
• Click the "Get Quotes" button.
• The available exchange rates will appear on the screen.
• Click the "Swap" button.

Buying and selling NFTs

Let's take the example of buying NFT on the OpenSea platform:

• Download the wallet app or install the browser extension, create a new account.
• Refill your MetaMask using a card or any other convenient method.
• Go to the marketplace website and add your wallet.
• Participate in auctions and purchase NFT.

DeFi Projects

In order to use the wallet in this sector, it has a built-in browser:

• Go to the browser tab on your account.
• Visit the website where you would like to make a DeFi-related investment.
• Connect your MetaMask to the project website by invoking a contract.
• Invest your funds by invoking the contract.

In addition, let's not forget that MetaMask is primarily a wallet, so its list of features also includes:

• Cryptocurrency Storage and NFT. MetaMask allows you to store cryptocurrencies belonging to different blockchains. MetaMask also supports the storage of NFTs, which can be art, collectibles, or gaming items.
• Sending and receiving cryptocurrencies and NFTs. MetaMask allows you to send and receive cryptocurrencies and NFTs to other users. To do this, you only need to know the address of the recipient's wallet.

Advantages and disadvantages of MetaMask

Advantages of MetaMask

• Ease of use: MetaMask provides a simple and easy-to-use interface, making it accessible to those who are new to cryptocurrency.
• Wide choice of networks: the wallet supports various blockchains such as Ethereum, Binance Smart Chain, Polygon and others, which provides more flexibility for users.
• Decentralization: MetaMask is decentralized and does not store users' personal data, which ensures a high level of security.
• Integration with decentralized applications (dApp): users can easily interact with various decentralized applications, such as decentralized exchanges and financial services.
• Security: the use of a mnemonic phrase and the ability to integrate with hardware wallets (e.g. Ledger) enhance the security of funds.
• Browser compatibility: MetaMask provides extensions for popular browsers such as Chrome, Firefox, Edge and Brave.

MetaMask Disadvantages

MetaMask has not really been the victim of serious hacking attacks related to exploits in its code. The wallet has not been subjected to hacks or other serious security threats throughout its history.
However, of course, one significant drawback of MetaMask is still its dependence on an internet connection, which can make it vulnerable to individual users. However, the following idea has been proposed as a solution to this problem: in 2018, MetaMask introduced the Ledger hardware wallet connectivity. This allows you to combine the reliability of a "cold" wallet with the convenience of a "hot" wallet, providing an additional level of security.

MetaMask wallet creation instructions

Let's see how to create a MetaMask cryptocurrency wallet in the browser:

1. Install the MetaMask extension for your browser (for example, for Google Chrome or Mozilla Firefox). This can be done via Chrome Web Store or Add-ons Market.

2. After installation, open the MetaMask extension in the browser and click the "Get Started" button.

3. In the next window you will see a message, then select "Create a Wallet".

4. Read and agree to the terms of use, and then click "I Agree".

5. Enter the password for MetaMask wallet and click "Create".

6. After that you will be shown the wallet recovery phrase (seed phrase). This is very important as it will allow you to regain access to your wallet if you lose your password. Write this phrase down on paper or keep it in a safe place. Never give this phrase to anyone.

7. After saving your wallet recovery phrase, click "Next" and confirm your phrase, enter it in the correct order.

8. Done! You have successfully created a MetaMask wallet. Now you can start adding tokens, sending and receiving cryptocurrency, interacting with decentralized applications, and more.

How to create a MetaMask wallet in the application on your phone

In order to create MetaMask wallet on your phone, you need to follow the steps below:

1. Install the MetaMask application on your phone from the App Store or Google Play Store.

2. open the application and press the "Start" button.

3. Read and accept the Terms of Use and Privacy Policy.

4. now create a new wallet. Click "Create Wallet".

5. Think of and enter a complex password. This is necessary to ensure the security of your MetaMask wallet.

6. Click "Create" and save the Seed Phrase. This is very important because you can use this phrase to recover your wallet if you lose access to it. Memorize the phrase or save it in a safe place.

7. After that, you will be prompted to proceed to add a wallet on different networks. You can select Ethereum Mainnet or other supported networks that you want to add.

8. Click "Add Network" and select from the available ones or enter the required information about the network you want to add.

9. Done! Now you can use your MetaMask wallet on your phone.

How to conduct transactions using MetaMask

To make a transaction using MetaMask, you need to follow the steps below:

1. Open MetaMask.
2. Select the network where you want to conduct the transaction. By default, MetaMask is connected to the Ethereum core network. If you want to conduct the transaction on another network, you need to select that network from the Network drop-down list.
3. Enter the address of the recipient.
4. Enter the amount of money you want to send.
5. Set the gas limit and the gas fee. The gas limit is the maximum amount of gas you are willing to pay to process the transaction. The gas commission is the fee you pay to the miners to process the transaction. You can set the gas limit and gas commission manually or use MetaMask's recommended settings.
6. Confirm the transaction.

After confirmation, the transaction will be sent to the network. You can track the status of the transaction in the "Transactions" section.

MetaMask Hot Wallet: CRYPTOLOGY.KEY team's opinion

MetaMask Hot Wallet has proven to be one of the most convenient tools for storing cryptocurrency, conducting transactions and interacting with various projects. MetaMask's features include its integration with external browsers and built-in browser, which allows users to conveniently interact with decentralized projects.

In terms of security, MetaMask is considered to be a fairly robust tool. However, as with any other type of wallet, the security of assets largely depends on the user. Special attention should be paid to storing the seed phrase, which is the key to your wallet. This phrase should be kept secret and should never fall into the hands of third parties, as it gives full access to your funds.

MetaMask differs from traditional exchange wallets in that it is a decentralized solution. This means that users have full control over their keys and funds without depending on the policies of centralized platforms.

It is also important to remember to have the network tokens in the wallet for transactions. For example, if you want to conduct a transaction with USDT TRC20, you need to have TRX tokens in your account to pay the network's fees. Otherwise, you won't be able to do anything with your USDT TRC20 in your account - this works identically for each network.

In addition, it's worth noting that through constant development and updates, MetaMask is constantly improving its functionality and usability. This makes it a great choice for both experienced cryptocurrency users and those just starting out.