A Burner Wallet for short, is a wallet that is not permanent. Burner wallets are not meant to be the place where you store your BTC or ETH life savings. Rather, burner wallets are meant to be convenient ways to access and spend your cryptocurrencies. Any wallet can be a burner wallet, it does not need to be a specific type of wallet. While burner wallet platforms are popped up, you don’t need to use them.
However, with the price of ETH gas taxes, it can be useful to use the specific ETH ones.
If you want a burner wallet, you can simply create a new wallet the same way you’ve always done. Then you send funds to the burner, use it as you want and you can just forget about it. You don’t even need to write the recovery sentence if you don’t want to. The wallet is unlikely to be in use long enough to require you to retrieve it, and since it’s meant to be a burner, you shouldn’t have a reason to have to retrieve it anyway.
How and why burner wallets can be used
Typically, burner wallets are used in situations where you don’t want to expose your real holdings, when you want to spend funds quickly, or when you don’t trust the decentralized application (Dapp) you interact with.
It has become somewhat recommended practice to use a burner wallet when participating in the minting of non-fungible tokens (NFTs). This is in case the platform is a scam and there is some sort of code within the smart contract that allows access to your funds/permissions. Using a burner wallet, you only put the amount you added (probably the exact amount needed for minting), and then you risk only that amount.
If you’re going somewhere that accepts cryptocurrency payments, like El Salvador, or a crypto event that allows sellers to accept ETH, it’s a good idea to create a burner wallet. So you finance your burner wallet with whatever you are willing or planning to spend. By using a burner wallet, you help mitigate the risk of your holdings being compromised since you only have a certain amount held.
You’re more likely to use a wallet burner on a mobile device than a laptop, as there are many more situations where you can use your phone to pay for something than on a laptop. By setting up a burner wallet on your phone, with a simple spending password, you can easily spend cryptocurrencies at an event. You feel confident because you’re not using your main wallet, while sellers get a bigger portion of the purchase than when you paid using a traditional payment method.
Burner wallets are likely to become more common as crypto is adopted in the mainstream. At present, there are not too many situations where you really need it.
