MetaMask, the world's largest self-custodial internet-connected wallet boasting over 22 million users, has introduced a new feature that allows users to convert cryptocurrencies into traditional fiat currencies like USD. This move aligns with the broader trend in the web3 space, where various players are striving to bridge the gap between digital assets and real-world usability.
The significance of self-custodial wallets, like MetaMask, lies in the fact that users have complete control over their digital assets, a feature known as "self-custody." This is a response to the vulnerabilities exposed by centralized exchanges, exemplified by the collapse of FTX. However, self-custodial wallets have traditionally been challenging to navigate, often requiring technical expertise. MetaMask and similar players are now actively working to make these wallets more user-friendly.
The newly introduced cash-out feature within MetaMask initially supports the conversion of Ethereum (ETH), the world's second-largest cryptocurrency, into various fiat currencies depending on the user's location. Here's how it works:
1. Users select their country.
2. They decide the amount of ETH they want to cash out.
3. MetaMask presents a list of third-party "off-ramp" providers, including MoonPay and Transact, which facilitate the conversion process.
MoonPay, for instance, takes over from this point, calculating the exchange rate and sending the converted funds to the user's designated bank account. This process is designed for speed, with users typically seeing their funds arrive in their bank accounts within minutes. Additionally, MetaMask has an existing partnership with PayPal, enabling users to withdraw funds to their PayPal accounts.
While this off-ramp option is a significant step toward enhancing MetaMask's adoption, there is a caveat – fees. Users are responsible for covering the gas fee, which compensates network validators for processing transactions on the underlying decentralized network. Additionally, users may need to pay fees to MoonPay or other cash-out providers for their services.
To provide an example, let's consider a MetaMask demo using MoonPay in the United States:
1. The user chooses to withdraw 0.05 ETH.
2. A gas fee of 0.00021 ETH is deducted.
3. 0.0458 ETH is sold.
4. This results in an additional transaction cost of 0.00399 ETH, roughly equivalent to 8% of the total transaction amount.
It's important to note that transaction costs can vary depending on the specific withdrawal partners available in a user's market. MetaMask is initially rolling out this feature in the United States, the United Kingdom, and parts of Europe, with plans to expand to more regions to accommodate its global user base.
MetaMask is not the only player in the crypto space working on facilitating cryptocurrency spending. Gnosis, a blockchain network known for its low gas fees, recently introduced a Visa card that allows users in Europe to spend cryptocurrencies from their self-custodial wallets, with intentions to expand this service to the United States and Hong Kong. As the crypto industry continues to evolve, the ability to seamlessly convert and spend digital assets will likely play a crucial role in its broader adoption.