by Jake Wengroff
Known for its simplicity and flexible design, Metamask is a popular hot storage option for those who are new to the crypto world — as well as those that are committed to Ethereum blockchain. But is the popular browser extension a safe way to hold your assets? Here’s what you need to know.
Metamask is a cryptocurrency wallet that is online and accessed through a web browser. Metamask is rather limited, as it is able to store keys for Ethereum cryptocurrencies only. Unfortunately, it cannot be used to store the keys for other types of crypto or digital currencies.
The Ethereum blockchain is a network where users can build their own apps, known as dApps, and brand new cryptocurrencies. Ethereum also allows users to write transaction guidelines, called smart contracts, through which other types of e-commerce or exchange can take place.
The cryptocurrency of Ethereum is called Ether; other cryptocurrencies built on the Ethereum blockchain are known as tokens. Most of the tokens built on the Ethereum blockchain are called ERC-20 tokens because they follow the rules that Ethereum developers have set out for creating new cryptocurrencies.
As such, the Metamask wallet can be used for storing keys for Ether and ERC-20 tokens on three different web browsers. It also allows users to browse the Ethereum blockchain from a standard browser.
Benefits of Metamask
Open Source and Community
Open-source software is generally considered a benefit because no single private, for-profit company owns the code. All of the Metamask code is online and free to access. It is continually reviewed and updated by the community, which counts over one million active users, many of whom contribute to and improve the platform.
Metamask uses HD, or hierarchical deterministic, settings to help users backup their accounts. They do this by giving the user a list of words called seed phrases. Seed phrases can be used to reset lost account information.
Metamask links directly with two exchanges for a facilitated purchasing experience. Users can select Coinbase to purchase Ether and ShapeShift to buy Ether or ERC-20 tokens.
Local Key Storage
Some wallet providers store keys on their own servers. This is common on exchanges that provide wallets, like Coinbase. Instead, however, Metamask keys are stored on the user’s own browser, not on a company’s owned or remote servers. This local key storage gives users more control over their public and private keys.
Risks of Metamask
There are a few risks of using Metamask. Let’s have a look at them.
The wallet is online, so it’s more at risk than hardware wallets or offline “cold” wallets. Like any “hot” wallet, assets stored on Metamask can be compromised via security vulnerabilities on your device or internet connection. For this reason, most crypto investors only use hot wallets like Metamask to store small amounts of cryptocurrency, and rely on cold wallets — which are not vulnerable to being hacked in the same way as hot wallets — to hold larger sums of cryptocurrency.
Because of Metamask’s hands-off approach to storing user data, Metamask doesn’t have access to any of a user’s information. However, the browser on which Metamask is installed will. Browsers collect browsing and internet usage data, including how often a user uses Metamask. This tracking data is usually a turn-off for cryptocurrency users.
Additional Safety when Storing Crypto
As an additional layer of security, crypto asset owners need assurance that in the event of a wallet breach, their crypto assets can be recovered quickly. That assurance can be in the form of title to the assets under ownership.
TransitNet is creating the industry’s first third-party title registry, to add a layer of protection for cryptocurrency assets by providing proof of ownership. With a title in place, investors can feel safer that additional security measures exist to protect them in the event of theft or compromise.
Join the forefront of the new crypto infrastructure. Request an exclusive invitation to TransitNet’s title registry when it launches today.
Jake Wengroff writes about technology and financial services. A former technology reporter for CBS Radio, Jake covers such topics as security, mobility, e-commerce and the Internet of Things.
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