Burner Wallets…What?
Using a burner wallet is an easy way to avoid wallet draining scams and mitigate any risks if a scam is accidentally encountered.
To clarify, a burner wallet is not a special type of wallet, but rather a secondary wallet used by NFT traders for the sole purpose of minting NFTs.
Burner wallets come at no costs and are easy to create for any casual crypto trader. You only need to have a piece of paper ready to write down the new seed phrase.
When to use a burner wallet
When a project first begins, whitelist holders are given priority and allowed to be the first ones to mint a token to the respective blockchain. That also means they can be the first ones to get scammed, so it is common for the traders to create secondary wallets with separate addresses to connect their whitelist approvals spots to.
After a project is safely minted, then you simply transfer it with a small gas fee to your primary wallet which is not associated with the whitelist mint.
Now, this doesn't mean that being on a whitelist is inherently dangerous, it's quite the opposite.
Security is a project team’s priority
Creating a safe platform for users is a massive priority for project teams that are designing serious and meaningful tokens.
When a team fails to deliver their products safely the community will remember and ignore future projects down the road. Trust and transparency go a long way in NFT trading and the reason why doxxed teams are preferred.
The scams that many encounter are deceptive in nature and trick you into believing that you are being instructed by the project team themselves. From here, victims are lulled into a false sense of security where they believe that they are getting a special pass to mint tokens earlier than others.
Examples of wallet draining scams
The best example of these deceptive scams is the most recent Bored Ape Yacht Club Instagram scam which saw the actual BAYC Instagram account itself becoming compromised.
Hackers were able to send out messages to BAYC holders with a link claiming to mint the new Otherside project which is creating massive metaverse hype for the blue chip project.
Eager by the message from the official page itself, BAYC holders were quick to rush to the mint which instantly drained their wallets of tokens worth above 100 Eth.
Practicing safe minting habits
While the BAYC scam was hard for anyone to suspect, it would have been easier to avoid if these holders were practicing better minting habits by using burner wallets instead of their primary holding wallets.
Hopefully this gets resolved soon because BAYC represents more than just themselves, but the success of NFTs as a whole due to their mainstream exposure and utility.
There is a lesson to be learned here and that’s to always practice safe minting habits. Whether it’s a mysterious DM on Discord or an actual message from a team’s official social account, practice caution and use a burner wallet first to always keep your funds safe.
