Hardly a day goes by in the NFT space without at least one investor falling prey to a scam and losing their NFTs. Just last month, actor and director Seth Green lost several blue-chip NFTs. Of this, one was a Bored Ape meant to be the lead character of his now tanked NFT TV show. As NFT scams continue to rise, a crypto burner wallet might be the solution you’re looking for.
So, what exactly is a crypto burner wallet and how can it keep your NFTs safe?
What Is A Crypto Burner Wallet?
Put simply, a burner wallet is much like any crypto wallet, the only difference being that it is not permanent. In other words, it is a temporary wallet that you use just for minting NFTs or making any transactions on a dApp.
Originally, Ethereum developer Austin Griffith developed a “Burner Wallet” in 2018 to make it easier to use crypto for daily transactions. As ConsenSys founder, Joe Lubin, explained, it is “sort of, a throwaway wallet for petty cash onto people’s phones, through a QR code.”
To explain, users could simply scan a QR code on their phones to make payments in crypto. However, today, you can use any wallet (hot or cold) as your burner wallet—you don’t necessarily need a dedicated burner wallet. The idea is to create a wallet separate from your main wallet where you keep only the minimum required amount to mint an NFT and/or pay for gas.
Why Do You Need A Burner Wallet?
Usually, you can use a crypto burner wallet when you are interacting with an insecure site, when you want to transact quickly, or don’t want to reveal your actual holdings. These days, an increasing number of people are using these wallets to mint NFTs. The primary reason for this is the growing instances of NFT scams.
Often, through phishing attacks and other means, hackers can gain access to your wallet. Before you know it, they can drain your wallet of all the crypto and NFTs, leaving you empty handed. However, by using a burner wallet, you can keep your primary assets safe.
Even in a worst-case-scenario where a hacker gains access to your burner wallet or a project you minted is a rugpull, only the limited crypto in your account will be at risk. All your remaining assets will remain safe in your main wallet.
Some Tips to Keep in Mind
If you plan to use a crypto burner wallet, make sure to keep these safety tips in mind:
- Give a nickname to your wallet so that you don’t mistake your permanent wallet for a burner wallet.
- Regularly move funds and assets from your burner to your more secure, permanent wallet.
- It is a good practice to swap burners occasionally.
While using a burner wallet is a good step to keep your NFTs space, always do your own research and take enough precautions to stay safe at all times. You can also use the Sunrise browser extension to detect NFT scams.
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All investment/financial opinions expressed by NFTevening.com are not recommendations.
This article is educational material.
As always, make your own research prior to making any kind of investment.
