What is a Burner Wallet and Why Should you Use One?

A burner wallet is a crypto wallet used to interact with decentralized applications (dApps) and sign transactions without putting at risk any crypto wallet that contains valuable assets.

Burner wallets are used by intelligent people who want to mint NFTs or receive airdrops without exposing to hacks or scams in any of their wallets that contain cryptocurrencies or already minted or purchased NFTs.

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Why Should you Use a Burner Wallet?

Any interaction with Web3 dApps requires the user to connect a wallet and sign a smart contract transaction giving the dApp some access rights like the capacity to access and manage the crypto assets or NFTs stored within that wallet.

And once access rights are granted to a third party, the following may happen:

– If a legitimate source has created the smart contract, only the actions intended by the user will be performed by the dApp. For example, mint an NFT or bridge assets between two chains.

– If a legitimate source has created the smart contract but contains a critical coding mistake, this mistake may be exploited by malicious people to take ownership over any valuable asset that the exposed wallet contains.

– If a malicious source has created the smart contract, the contract will probably provide extensive grant access rights that can be used by those who made the contract to drain the wallet of any valuable assets.

Below is an example of a malicious website requiring crypto users to grant access rights to their wallets.

And there were several cases of users granting access rights to this party and having their NFTs transferred away from their accounts to the scammers’ accounts.

Ice phishing example.

When approving a smart contract, you have to be extremely careful and make sure that you fully understand what access rights you are granting to the third party.

Now, if you are not 110% sure that a site or party is legitimate and trustworthy, would you use one of your leading wallets or the burner wallet to sign this smart contract? 

Note the statement from the picture below:

‘By clicking approve, you are granting access to all the NFTs you currently own on this contract and any NFTs you currently own on this contract and any NFTs on this contract you may acquire in the future until you revoke this approval. The party to whom you’re granting approval will be able to transfer your NFTs from your wallet without further notice. Proceed with caution.’ 

smart contract example

We hope we have made you aware of the benefits of using a burner wallet when interacting with third parties that are not yet deemed trustworthy.

Better to create and use a burner wallet, even in some cases that can be a bit of a hassle, than lose valuable assets after signing a smart contract created by a malicious party.

How to Create a Burner Wallet?

Metamask is one of the most well know hot wallets, and it has a straightforward process to create new wallet accounts.

Metamask crypto wallet

Hot wallet for browser extension and mobile devices
Non-custodial

If you are not that familiar with wallets and the process of creating new wallet accounts, Metamask may be a good starting point.

But, in general, all the wallets that give the possibility to create new wallet accounts have a ‘create account’ option that is easy to find.

Metamask burner account

Apart from Metamask, there are many other wallets that offer the possibility to create new wallet accounts. For example, the phantom wallet is a well-known Solana blockchain wallet that will soon also be able to interact with the Ethereum and Polygon blockchains.

Phantom wallet

But, before deciding to setup a new crypto wallet, please make sure that you are choosing the safest wallet within your possibilities.

The safest crypto wallet

Find out which crypto wallet is the safest for your specific needs.
KNOWLEDGE

What is the Cost of Transferring Crypto Assets to a Burner Wallet?

While using a burner wallet is an excellent practice, there is a cost involved in transferring assets from one of your main wallet accounts to the burner wallet account.

For example, if you need to claim and airdrop or mint an NFT, you may need to transfer assets to the burner wallet account, which has a cost.

The cost will depend on the blockchain, as some blockchains like Ethereum have a higher transaction cost than some other blockchains like Polygon.

Metamask send crypto between accounts

But while transferring assets and the gas fee costs may be a nuisance, would you risk one of your main wallet accounts, or is it better to pay some gas fee to make sure that only the assets from the burner wallet are exposed in case of signing a malicious smart contract or falling for a scam?

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Are you looking for additional information about the same or similar topics?

How to Keep your Valuables and Digital Assets Safe

Now that you understand what a burner wallet is and it’s benefits, you may be interested in increasing your knowledge and learning about digital safety and how to keep your digital assets safe.

Who Owns The Private Keys?

Not Your Keys Not Your Coins
GOOD PRACTICES

Wallet Private Keys

Learn why your wallet's private keys are so important .
KNOWLEDGE

And don’t forget to also learn about digital safety good practices because the more good digital safety practices you follow, the more secure your digital assets will be.

Two-Factor Authentication

Use 2FA to keep your digital accounts safe from hacks.
GOOD PARCTICES

Encrypted USB Drive Security

How To Protect Your Data With An Encrypted USB Drive
GOOD PRACTICE

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