Cryptocurrency Wallets for NFTs
A reader of this newsletter requested a beginner guide for setting up a crypto wallet to use for NFTs. I thought easy-peasy, all you need is MetaMask… Except it isn’t quite that simple.
Until about a year ago, Ethereum was the only one real choice of blockchain network to publish or collect NFTs and everybody used MetaMask, a web browser extension. As the NFT industry has grown, so have the pain points on the Ethereum network.
Exactly one year ago, 1 Ethereum token cost approximately $340 USD. To buy the same amount of Ethereum today costs about $3,600 USD, an increase of nearly 10x! In addition to Ethereum being expensive, the network fee you pay (gas) to interact with the Ethereum network has also skyrocketed.
Additionally, these fees increase even more when many people are trying to use the network, resulting in fees of hundreds of dollars to buy an NFT from a popular drop.
What’s the solution? It turns out there are a number of solutions, and some are more confusing than others.
Ethereum is evolving to Proof of Stake, which is the mechanism that secures the network, creates new tokens, and processes transactions. Supposedly when this is complete, the network will be able to handle many more transactions and the gas (transaction fee) prices will be a fraction of today’s prices.
Meanwhile, the glacial speed in upgrading Ethereum has inspired companies to create other blockchain solutions. In your NFT journey, you’ll likely find yourself creating one or more wallets for different blockchain networks.
One solution gaming NFT projects have embraced is the use of Ethereum side chains. These side chains are independent blockchains that are compatible with the Ethereum network and boast having low or zero fees. Assets from these side chain networks can be moved back onto Ethereum with a bridge application. If you play Axie Infinity, you will use a Ronin wallet that uses an Ethereum side chain. If you play Splinterlands, you are probably already using the Hive blockchain without even knowing it!
Many blockchain games have tried to make it as easy as possible to use a crypto wallet by creating a user account in the game. However, this ease of use comes at a price. It usually means the keys for your crypto wallet is stored on the servers of the game company. If you do not have access to the private keys for your wallet, then you can lose your assets. There is a saying in crypto, “not your keys, not your crypto.”
The “Crypto” in crypto wallets refers to the cryptographic keys that enable the technology. A crypto wallet has two parts: a public and a private key. You can think of these two parts like a lock and a key.
Imagine unlocking the front door on your home (public key) with your key on your keychain (private key). You don’t want someone to get hold of your keychain, because someone else could enter your home and rob you.
Crypto wallets work exactly the same way! It’s extremely important when setting up any crypto wallet to make sure you write down the recovery words for your wallet and store them in an extremely safe place - like in a safe deposit box or inside a fireproof safe.
Setting up Metamask
The most common Ethereum wallet for NFTs is MetaMask. I’ll walk you through configuring MetaMask, but if you need to install a different web wallet, you will use a similar process.
Step 1: Download MetaMask extension or app. When you visit the MetaMask website, you can choose which OS/browser where you’d like MetaMask installed. Chrome, Brave, Firefox, and Edge are supported on computers, and a standalone MetaMask app is available for iOS and Android.
Step 2: If you’re adding MetaMask to your web browser, it will ask for permission to add the extension.
Step 3: Once MetaMask is installed, you will have two choices. Set up a new wallet, or restore your wallet from a seed phrase (these are the recovery words I cautioned about above). Since we’re setting up MetaMask for the first time, select “Create a Wallet.”
Step 4: Next, MetaMask will ask if you want to provide network usage data. This is up to you, but I tend to opt-out of most of these things. You do not need to agree to use MetaMask and it will not affect the functionality of the app. Worst that can happen if you say “No thanks” is a coder is somewhere crying in a corner because they don’t have data to diagnose an elusive bug.
Step 5: Create a password that you’ll be able to remember. This password only unlocks your MetaMask wallet for use in the browser. It is not part of your private key. In the event you lose your password, you can reinstall your MetaMask with your seed phrase, which will restore your private key.
Step 6: We’re almost to the big moment where you create your public and private keys! The MetaMask team has prepared a short video. Please take the minute and half of your time to watch it! Then click the “Next” button and your keys and secret phrase will be generated.
Step 7: This is the last part! Now you’re ready to write down your SECRET WORDS (seed phrase) and store it in an ultra-safe location. There’s a button that says “Remind me later,” but don’t click it, no matter how much you might be tempted! Your seed phrase cannot be replaced without creating a whole new wallet. If you have any assets in your wallet, have not written down your seed phrase, and then forget your password, you WILL lose any cryptocurrency and NFTs that are in that wallet.
Once you have your wallet installed, you can pin the MetaMask extension to your browser toolbar fo
Then you can click on the little MetaMask icon and your wallet will open in a pop-up window. You can copy the address for your MetaMask Account 1 by clicking on the little copy icon next to the string of numbers and letters beginning with 0x below “Account 1”.
Once you have your MetaMask account set up, you will need to fund it with Ethereum in order to purchase or publish NFTs.
The easiest route to fund your wallet is to purchase Ethereum on an exchange like Coinbase, Kraken, or Gemini. For a more comprehensive list, Ethereum.org has a searchable database.
Now you have your wallet set up, here are some links for using MetaMask, including tips for adding additional Ethereum compatible networks to your wallet, and also how to configure a hardware wallet to work with MetaMask. If you have more questions, please feel free to comment on this article and ask, or send an email to me.
Additional resources for using MetaMask