What Is a Burner Wallet

A burner wallet is a temporary crypto wallet that users create for potentially risky interactions with various blockchain applications. Burner wallets are not meant for storing large amounts of crypto but should contain just enough for a single or a few interactions.

How Do Burner Wallets Work?

Burner wallets can be created using hierarchical deterministic (HD) wallets, which can generate numerous accounts from a single secret seed phrase. Every account within an HD wallet has its own private key but is managed under the same seed phrase.

To use a burner wallet, you can generate a new account specifically for working with potentially risky blockchain applications or smart contracts. The key is to reduce risks by keeping your primary wallet and funds separate from these activities. For example, you could create a burner wallet when participating in new airdrops or when interacting with a new smart contract that was not audited.

By segregating your assets into different types of accounts, such as a primary account for storing most of your assets and a separate burner account for risky interactions, you ensure that even if a burner wallet is compromised, your main wallet and most of your crypto stored on it remain secure.

Benefits of Burner Wallets

Safe browsing

Users often explore new blockchain platforms, but they tend to have vulnerabilities or scam projects. Using a burner wallet when engaging with these new applications is crucial to ensure that even if a platform is malicious or compromised, most of your crypto assets remain secure.

Protection against malicious smart contracts

By using a burner wallet to interact with smart contracts, you can isolate the potential risks to a separate disposable account. This safeguards your main wallet from being drained in case of faulty smart contracts.

Conclusion

Burner wallets are temporary cryptocurrency wallets that users can use to mitigate the potential risks related to interactions with various blockchain applications.