Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
What is Metamask?
Designed in 2016 by Consensys, Metamask is an Ethereum digital wallet that tries to simplify access to decentralised applications (dApps), including decentralised exchanges (DEXs), gaming platforms and staking opportunities in the decentralised finance (DeFi) space. In October 2020, the application had 1 million active monthly users.
Metamask provides a user-friendly bridge between your web browser and the Ethereum blockchain, which is the host network for many dApps. Users can store Ether or any other ERC-20 token that was built using the Ethereum network and then use that cryptocurrency with the dApp of their choice.
Upon release, the wallet was available as a browser extension. A Chromium-based web browser is required such as Chrome, Firefox or Brave. If you would prefer not to use Metamask through a web browser the company has now released a smartphone app version for both Android and iPhone.
What sets Metamask apart from other digital wallets is its encryption capabilities. Passwords and private keys are stored securely, with the user only needing to manage their own independent seed phrase.
Although built for the Ethereum network, Metamask provides access to networks such as Binance Smart Chain and other testnets. Metamask provides flexibility to switch between different mainnet networks and the convenience to connect multiple wallets.
Metamask allows users to directly connect with Ethereum dApps without the need to run an Ethereum node. This would involve downloading the Ethereum blockchain. Before Metamask, to communicate with a dApp you had to provide private keys to your cryptocurrency wallet – a high-risk move. dApps now ask for permission for funds access through Metamask, which means there is no need for your private keys to be sent to the dApp, making the process much more secure.
How to install Metamask?
To use Metamask you will need to use a Chromium-based web browser such as Chrome, Firefox or Brave.
Browser extension. Head to the Metamask website and select your chosen browser. Click “Install” for your chosen browser, which will take you to the associated download page. The steps we will go through here are based on the Google Chrome browser but will be applicable to other browsers.
Click “Add to Chrome” followed by “Add extension”.
Create an account and wallet. Click on “Get started”. Click on “Create a wallet”. You will be prompted to create a password for your digital wallet and agree to the terms and conditions.
The secret seed phrase. Next, you will be shown a list of 12 words. This is your seed phrase and can be used for the recovery of your digital wallet if you forget your password. This seed phrase is extremely important and must not be shared with anyone else. Anyone with your seed phrase has access to your cryptocurrency. Write down the 12 words physically or store them somewhere offline such as a thumb drive.
Verification of seed. Verify your seed phrase on the next page by selecting the words in the correct order. Once verification is complete your Metamask digital wallet will be ready to go.
How to add cryptocurrency to Metamask
Once you have Metamask installed on your web browser you can now deposit cryptocurrencies either from an exchange or your hardware digital wallet.
Open the Metamask application. Click on the Metamask extension icon at the top right of your browser.
Copy public address. Your public address is located at the top centre of your Metamask application screen. Hover over “Account 1” and “Copy to clipboard”.
Send cryptocurrency. Paste your public address into the platform you are using to send cryptocurrencies from. Agree to the conditions and click “Send”.
Your Ether or ERC-20 tokens will arrive in your Metamask digital wallet once processed.
How to send cryptocurrency from Metamask
When you have cryptocurrencies stored in Metamask, you may want to remove them and add them to your cold storage (offline) hardware wallet.
Click the Metamask browser extension at the top right of your screen.
Choose a cryptocurrency. Select which cryptocurrency you would like to send from your Metamask wallet.
Click “Send” and enter the public address of the wallet you wish to send your cryptocurrency to. The public address will be found and verified.
Enter the amount you wish to send and the transaction fee. The higher the transaction fee, the quicker the transaction will be processed. Click “Next”.
Confirm the transaction. Verify the details are correct and click “Confirm”.
What are Metamask fees?
For every transaction conducted using Metamask a default gas fee is applied, which is dependent on the current activity of the Ethereum network. The higher the activity on the network, the higher the default gas fee. The gas fee is stated on the Metamask application before payment is approved.
Parameters are available where a user can increase the gas fee and also set gas limits to avoid excessive transaction costs. A higher gas fee on the Ethereum blockchain is related to a quicker transaction time and vice versa.
Metamask has recently released its own swap function, which enables users to swap Ether for a range of ERC-20 tokens. Metamask performs this by searching through several DEXs to find the best exchange rate and fees. For this service, Metamask charges a service fee between 0.3% and 0.875%.
Must read: Be warned that setting gas fees too low can result in a stuck transaction, which does not get picked up by miners (who are incentivised by gas fees) and will not get transmitted to the blockchain. If this happens, you will have to follow the instructions outlined here to rebroadcast your transaction, otherwise your cryptocurrency will be unavailable and stuck in a state of limbo.
During times of extreme congestion, Metamask can fail to set the appropriate gas fee, resulting in stuck transactions. If this happens, follow the instructions linked above.
Is Metamask safe?
Metamask is an extremely secure digital wallet, praised for its encryption technology and has suffered no digital hacks so far. For use with the Ethereum blockchain, it is one of the safest options. However, as with anything that is connected to the Internet, there will always be risks from an outside breach. It is, therefore, important to stay vigilant when using. Metamask is a useful application for interacting with dApps but for cryptocurrency storage, nothing beats a hardware digital wallet.
User-friendly interface. For such a complex product that interacts with the Ethereum blockchain the user interface is simple and easy to understand.
Account back-up. The seed phrase provided by Metamask allows users to automatically reinstate lost account information.
Cryptocurrency purchases. Metamask offers users the opportunity to purchase ERC-20 cryptocurrencies directly through the application.
Control of private keys. Public and private keys are stored locally on your web browser and not on Metamask servers, giving users more control.
Connectivity. Due to its widespread usage, Metamask can connect with the majority of dApps.
Online risks. Having a digital wallet that is connected to the Internet means there is a constant risk of account hack.
Browser data collection. Although Metamask will not collect any information from you, as the application is hosted by your web browser, the web browser might. It won’t be able to access private keys or codes but may collect information on how much you interact with the browser extension.
Alternatives to Metamask
Trust Wallet is a digital wallet that is also compatible with the Ethereum network. Unlike Metamask, the wallet is only available on mobile, but it does allow the storage of cryptocurrencies outside of the Ethereum network. Trust Wallet can also connect with the non-fungible token system and offers the opportunity to purchase cryptocurrencies directly.
The Binance Chain Wallet was launched in September 2020 in conjunction with the Binance Smart Chain (BSC) network. The BSC network was created to offer a high-speed, low-cost alternative to the Ethereum network. The Binance Chain Wallet is also a web browser extension and offers compatibility with the Ethereum network.
Metamask and hardware wallets
For the best security possible, use Metamask with a hardware wallet. Products such as Trezor and Ledger come with native support for Metamask.
Metamask is an extremely convenient application for accessing dApps on not only the Ethereum network but also other networks such as Binance Smart Chain. Its user-friendly interface makes communication with dApps much simpler and appealing to a wider array of cryptocurrency users.
Although convenient for use with dApps, like any online digital wallet remember to store your cryptocurrencies offline after use.
The gas limit, or transaction fee limit, can be set in Metamask using the settings tab. In advanced options you can set the maximum gas fee you are willing to pay for a specific transaction.
You can only store cryptocurrencies that were built and developed on the Ethereum blockchain. These are more commonly referred to as ERC-20 tokens.
In order to store cryptocurrencies from a different blockchain, such as Binance Smart Chain, you will need to add that network manually to the Metamask application.
Metamask is compatible with both Ledger and Trezor hardware wallets.
Restoring a Metamask digital wallet requires the use of the 12-word seed phrase that is provided to you when setting up your account.
Account balances do update automatically and represent current prices.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
James Hendy is a writer for Finder. After developing a keen interest in traditional financial investing, James transitioned across to the cryptocurrency markets in 2018. Writing for cryptocurrency exchanges, he has documented some of the key blockchain technological advancements. James has a Masters of Science from the University of Leeds and when he isn't writing, you will either find him down at the beach, reading (coffee in hand) or at the nearest live music event.
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