I agree that you don’t need blockchain expertise to make your first crypto transaction. All cryptocurrencies listed for sale are blockchain-based assets that have value and can be easily sent and received. So, ensure the amount of CAD you plan to invest and head to popular crypto exchanges like Binance or Coinbase.
But is this enough? I wouldn’t say so. You do need to know the type of crypto you’re buying, its purpose, and utility. First, these factors are crucial for building a workable, long-term trading strategy. Second, you should know the basic features of your newly-purchased cryptos to ensure suitable storage space and portfolio management.
The crypto industry is dealing very well with its diversity. However, as much as crypto exchanges and wallets are striving for multi-functionality, certain crypto wallets are still tailored for certain cryptos. Bitcoin HODLers don’t turn to the same storage solutions as traders active in the DeFi sector.
So, in this article, I’ll focus on an Ethereum wallet that’s a common destination for the DeFi community — MetaMask (metamask.io). Stay tuned, and you’ll find out what types of cryptocurrencies MetaMask handles and how to transfer them.
Coins vs Tokens
People refer to cryptocurrencies with different names. So, you can often spot how the terms “coins,” “tokens,” “cryptos,” and “crypto assets” are used interchangeably. While, for the most part, this misuse is harmless, crypto coins and tokens make a huge difference.
Technically, they’re both tradable blockchain products. However, coins are “born and raised” on their native blockchains and have a strictly defined purpose of serving either as a store of value, a medium of exchange, or both.
Bitcoin (BTC) is the coin in the industry, but there are also plenty of other successful representatives, including Ethereum (ETH), Litecoin (LTC), Cardano (ADA), and Dogecoin (DOGE).
On the other hand, tokens “live” on another blockchain as they don’t have their own. Not all blockchains are good hosts for tokens — only those that support creating smart contracts on top of them.
Smart contracts are automated programs. They run without a human trigger after the given conditions are met on behalf of both parties. The self-executing nature of smart contracts allows developers to build many other blockchain products, not only tokens. This includes decentralized apps (dApps), DeFi web structures, and decentralized autonomous organizations (DAOs).
How Do Tokens Work?
The Ethereum blockchain has the best-developed grounds for such decentralized products as tokens. Ethereum uses the Solidity programming language for building smart contracts, and practically, anyone who can code in Solidity can launch their token. Believe it or not, over 120 million tokens have been built on the Ethereum blockchain so far.
Because of the immense variety, Ethereum developers have prepared different sets of standards so that newly-created coins stay compatible with different blockchain protocols. ERC-20 tokens are the most widespread ETH-based tokens. They don’t serve as a medium of exchange only but play a key role in the work of dApps, DAOs, and other DeFi establishments. These tokens can be governance tokens, utility tokens, or security tokens.
Still, some have grown into popular trading assets on both centralized and decentralized crypto exchanges. For example, Shiba Inu (SHIB) and the leading Tether (USDT) stablecoin are both ERC20 tokens. The NFT digital art products are also tokens operating under the ERC-721 and ERC-1155 standards.
Remember that here I’m talking about Ethereum tokens. There are a few more blockchains that enable the creation of DeFi tokens, such as EOS, Tron, Tezos, and Binance Smart Chain (BSC/BNB).
Now, let’s see what types of tokens the MetaMask menu supports.
What Is MetaMask?
Many multi-cryptocurrency wallets are token-friendly and allow you to store the full range of ERC-20 and other DeFi assets. MetaMask’s popularity lies in the fact that it isn’t only a vault for your tokens. This wallet allows you to smoothly send and receive all the supported crypto. It also serves as a gateway to multiple dApps and DeFi platforms, where you can make use of your token holdings by gaming, selling NFTs, staking, farm yielding, etc. Above all, MetaMask enables direct exposure to modern decentralized exchanges and AMM protocols like SushiSwap and Balancer, where you can trade directly from the wallet.
Interestingly, MetaMask was launched right before the rise of the DeFi world, so the team led by Aaron Davis and Dan Finley went into the DeFi frenzy fully prepared. Initially, MetaMask was envisioned as a user-friendly Ethereum tool, but over time, it has grown into a “home” of over 21 million DeFi enthusiasts. It’s simple, users who play with DeFi tokens aren’t HODlers by nature but active participants in the trading arena.
The myriad of options that MetaMask offers doesn’t conflict with its intuitive interface, which is great, as full-featured solutions are usually very obscure to navigate. You can access the wallet through a browser (a Chrome or Firefox extension) or download the highly functional mobile app on your iOS or Android device.
As such, we can say that MetaMask is a hot wallet or, more precisely, a web and mobile wallet. In general, hot storage isn’t the best option, as your private keys stay on the search engine you use for various daily activities. Yet, what makes MetaMask different from most web-wallet products is its noncustodial nature. This means that the wallet gives you full control of your private keys as they stay within your device, not on the platform’s servers.
The wallet welcomes Ethereum and the full range of ERC20 and other ETH-based tokens, including popular NFTs. Apart from Ethereum, the wallet supports tokens built on other smart-contract blockchains like Avalanche and Binance Smart Chain, but it’s also open to new DeFi projects.
If you ask me, the best thing about MetaMask is its ability to connect with hardware wallets. As I already mentioned, hot wallets can never be fully trusted because of their direct internet exposure. So, if you want to accommodate your private keys offline and still use all these colourful MetaMask features, you can buy Ledger and Trezor hardware wallets and connect them to your MetaMask account. That way, you can get the best of both worlds — robust security of your private keys and high functionality with a user-friendly design.
How to Set Up MetaMask
Now that you know what to expect from MetaMask, let’s move to how you can handle the wallet program. The wallet’s ability to easily transfer funds to another token-contract address is perhaps its most desired feature. To transfer tokens from MetaMask, you first need to set up the wallet and ensure you have the tokens stored on it. So, let me walk you through the MetaMask setup process first.
In this step-by-step tutorial, I’ll use the Chrome extension. The mobile app is pretty handy, but for starters, I always prefer the desktop version because of the clearer display:
- Find the MetaMask browser extension on a new Chrome window and install the plugin.
- Click on the extension at your top right to access the Metamask interface.
- Accept the Terms and Conditions and create a MetaMask account by setting a password.
- Now, MetaMask will ask you to set up a seed or secret recovery phrase. Don’t skip this stage. This 12-word phrase is the only way of restoring your account if you lose your password or have your device damaged. Make sure you store the seed phrase in a safe place.
- Once done, click I’VE COPIED IT SOMEWHERE SAFE, and the system will lead you to the MetaMask dashboard.
- Now, you are ready to go and fund your wallet. From your dashboard, navigate to the Account icon and select Assets. There you can see the Add Token button.
- Search or browse for the token you want to deposit and click Next. Remember that you can select multiple tokens simultaneously.
- Finally, click Add Tokens, insert the required information as instructed on the screen and get your token/s to your MetaMask wallet. If you can’t find the desired token in the search bar, turn back to Add Token and navigate to the Custom Token tab.
How to Transfer Tokens From MetaMask
As I said, MetaMask offers an unlimited number of options for your tokens — direct swaps on the supported DEXs or locking them for passive income. For the time being, I’ll focus on standard transfers. So, this is what it takes to send your tokens from MetaMask to another address:
- Open a new Chrome window and find the MetaMask extension.
- Log in to your MetaMask account and navigate to Send from your dashboard.
- Copy the recipient’s wallet address and paste it into the empty field Recipient Address.
- The wallet system will recognize the token, so you’ll only need to enter the number of tokens you plan to transfer.
- Check the information you’ve entered and click Next.
- Now, you’ll see a separate window with all the transaction details, including your and the receiver’s wallet addresses and the selected amount.
- Read this part carefully. You’ll also notice a Gas limit and Gas price on the pop-up window. For each transaction on the Ethereum network, the sender must pay transaction fees, called Gas. These fees are settled in Ether (ETH), regardless of what token you’re sending. So, before initiating an outgoing transaction, you have to ensure that you have some ETH coins in your wallet apart from the DeFi tokens you’re transferring out. Gas fees are variable depending on the network load. With MetaMask, this part auto-fills but you can check the amount of gas fee on ETH Gas station and search for recommended prices.
- Finally, select Send Transaction to finish the process.
A Few Words Before You Go…
MetaMask is more than a decent solution if you want to explore the DeFi ecosystem. I can readily say that this wallet contributed a great deal to the development of this entire crypto sub-industry because of its incredible ease of use and comfortable navigation. After you overcome the initial reluctance and buy some ETH coins, MetaMask can be a perfect departure point for earning profit through various dApps, NFTs, and DAOs.