Now you’ve got your MetaMask wallet set up and configured (see our tutorial here if you want some help with that), let’s look at some of its uses. If you’re in the market for some cryptocurrency, one of the most useful functions of the MetaMask wallet is that it allows you to connect to decentralised exchanges (DEXs) such as Uniswap, PancakeSwap, Trader Joe, and Sushiswap, in order to buy and sell cryptocurrencies without going through a middleman. This kind of decentralisation really underpins the concept of blockchain technology itself, and the movement toward digital currencies and ‘Web3’ it promises to unleash. So before we go any further, it’s worth having a look at that.
The (Increasingly) Centralised Internet
To bring us up to speed, society as we know it is currently deployed on and interacting through what’s widely regarded as the second iteration of the Internet, or Web 2.0. Web 1.0, as it’s now retrospectively known, was the original, read-only (or ‘Syntactic’) web, consisting entirely of webpages built by developers with static file systems, little user interaction, and content delivered primarily in text or graphic format. Participants, or users, could simply consume internet content, as those of us who weren’t developers did, roughly from 1991 to 2004.
Web 2.0, which has existed since then and is the internet most of us know and love, is the interactive read-write and social web. Apps and sites are designed in such a way that anyone can become a creator, and the vast majority of the most popular and widely used websites rely entirely on user-generated content, with revenue primarily generated through targeted advertising.
Now, this hasn’t been an entirely negative thing, in particular, we have seen the significant democratisation of both information and entertainment; through the removal of many of the old gatekeepers the power to promote or relegate artists and commentators has been placed, to some extent at least, in the hands of the consumers. But somewhere along the way, we’ve lost control of our data, and even many of the legal rights to our own content.
Meanwhile, the largest sites keep hoovering up more and more users, the largest companies keep gobbling up the smaller companies, and everything is becoming more and more concentrated in the hands of a few increasingly powerful Silicon Valley elites, who have gained control of the flow of information, of the marketplace for arts and ideas, and make a handsome living selling our data to interested parties.
In short, we have become the product.
And herein lies the biggest problem at the heart of Web 2.0. The centralisation of user data creates an obvious vulnerability, which has been exploited time and time again both by unscrupulous hackers and over-reaching governments. Businesses track and save user data without permission, and data breaches are common. Governments have shut down servers or seized bank accounts in order to maintain control over citizens. Websites apply their own ‘community guidelines’ when it comes to publishing and boosting or censoring and removing content, and these are often opaque, inconsistent, and politically guided. Just five or six corporate entities now monitor and control just about everything we do online these days, from sharing our thoughts on the recent Australian federal election, to paying our electricity bill, which usually isn’t a problem until you say or do something one of these companies doesn’t like. Then it can be a very big problem for you.
All of which, one might note, is rather at odds with the somewhat utopian ideals of the earliest internet pioneers, who envisioned a ‘free, open, global and equal’ internet. Web 2.0 certainly wasn’t what they had in mind.
Enter Web3.
The Decentralised Internet
At the heart of the move towards decentralisation is blockchain technology. Without going too far into the technicals, a blockchain is a distributed database that is shared among the nodes, in some cases many thousands of nodes, of a computer network. In this way, the information is decentralised, and is therefore immutable, which means that the data entered is irreversible. This makes most blockchains, and by extension most decentralised applications (DApps) built on these blockchains, more or less unhackable. Furthermore, because intermediaries are no longer required to bridge between creators and consumers, user data and access is no longer controlled. This opens up all sorts of possibilities, and it’s just such a possibility we’re going to enjoy today with our Metamask wallet, so read on.
Centralised vs Decentralised Exchanges
In the now legendary Bitcoin Whitepaper published in 2008, the still remarkably anonymous ‘Satoshi Nakamoto’ talked of the problems as he saw them in the current financial system. At that time, it was impossible to send money directly from peer to peer, everything had to go through intermediaries such as Paypal or Swift, and this had created (and continues to create) a number of issues around efficiency, privacy, autonomy, and security. Sending small amounts of cash to family and friends online was not possible without several middlemen, exchange fees, service charges, and other barriers, and most of our money is now stored in centralised bank accounts which can be hacked, shut down, or seized.
As Satoshi wrote, “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.” In this brilliantly succinct declaration, the philosophy underpinning the concept of Bitcoin, and with it cryptocurrencies and Web3 in general, was announced to the world. Or at least, to a small handful of largely indifferent tech geeks on an obscure messaging board.
That isn’t to say that today, everything that happens in the world of digital currencies is built on a decentralised framework. There are more traditional ‘centralised’ exchanges even for cryptocurrencies, the most popular and well-known of which are probably Binance and Coinbase. Centralised exchanges are operated by one central authority that manages the network of transactions. The company in charge is responsible for holding the ledger, executing transactions, securing user data, and all the other responsibilities that come with managing a financial system.
Centralised exchanges do offer some benefits. For a start, many offer an on-off ramp which allows you to buy into crypto using fiat currency, and an exit route for your profits. Reputable exchanges are more user-friendly and offer higher levels of comfort for inexperienced traders, and many offer additional functionality such as crypto wallets, digital debit cards, banking services, and access to large amounts of financial data.
Binance and others like it are therefore very easy to use, hence their popularity, but the fact remains that as soon as you transfer some or all of your digital assets onto such a centralised exchange, you are no longer in control of them. While sites like Binance have beefed up security in leaps and bounds over the years and do offer some insurance against against any losses incurred, security remains a concern and breaches do happen. Both Binance and Coinbase have suffered highly successful hacks in the past, and no doubt will again. Furthermore, as a user of a centralised exchange, you do not have access to the private keys of your exchange account’s wallets, which means you must put all your trust in the hands of the exchange operators. They do also support a limited range of coins and tokens, which means you’re unlikely to find the next 100x on Coinbase or Binance.
For this reason, many gravitate towards the growing plethora of decentralised exchanges available on Web3, and with your Metamask wallet you can connect directly to most if not all of them. In the next article, we’ll look at a few of the most popular DEXs, how to connect your Metamask wallet, and how to switch between different blockchain networks to buy or sell different coins and tokens. Until then, thanks for reading!
