Erik Weijers, a year ago
MetaMask is a software wallet that acts as a bridge between your crypto coins and the world of decentralized finance (defi). Via MetaMask you can send crypto to, for example, decentralized lending platforms or swapyour own coins. All this happens without an intermediary: there is no bank or exchange that you first need to hand over your email address or copy of your passport.
MetaMask started in 2016 as a browser extension for Chrome and Firefox. Since September 2020, there is also an app for iOS and Android. The number of users increased rapidly in 2021: from about 5 million in April over 20 million by the end of that year.
The MetaMask wallet is only one link in the process of sending or swapping crypto. Indeed, MetaMask must in turn connect to a decentralized exchange (dex) such as Uniswap or PancakeSwap. Another way of saying this is that MetaMask is a bridge between the "old" internet and blockchain. And when we say blockchain, we are talking about the Ethereum blockchain. So only coins based on Ethereum or blockchains compatible with it, like Binance Smart Chain, can interact with MetaMask. Do you want to buy an NFT in the Solana ecosystem? Then you won’t be able to do that with MetaMask (Solana has its own wallets, like Phantom).
One of the advantages of MetaMask is that you can create multiple wallets. You also easily import wallets you already have. For example your coins on your Ledger, or another hardware wallet. Another advantage is that the installation of MetaMask is free. So how does the enterprise behind MetaMask pay its developers? First, by the small margin it charges on purchasing crypto, through a third party. Second, by a small margin on swaps.
One disadvantage of MetaMask is that the user interface is not very easy for beginners to figure out. It takes some practice and trying. But that has its charms: you can smell the blockchain as it were and you won’t have that with crypto transactions via, say, Paypal.
Not your keys, not your coins applies here. When creating a MetaMask wallet, a seed phrase of 24 words is generated. If someone gets their hands on it, they can run with your crypto.
The flip side of this risk is the autonomy it gives. Owning your money yourself is revolutionary. Unlike with a centralized exchange, when using MetaMask you remain in possession of your own crypto: you have the keys. They are stored locally, on your own system. This is fundamentally different from using a bank or centralized crypto exchange, where you just have to hope that they take good care of your money.
However, this does not mean that using MetaMask is without risk.
First, there is the risk of hacks. The risk of something going wrong with MetaMask itself is not zero. But admittedly, the chances are not great either: the open source source code has been extensively reviewed by experts. But hacks can occur closer to home: for example, malware on your own system that records your keystrokes.
Second, the probably even greater risk of doing something wrong yourself: for example, the loss or theft of your seed phrase. There is no customer service you can call to correct the mistake!
As long as you are aware that with great power comes great responsibility, some experimenting with MetaMask is definitely worth considering.
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