Solana's ‘spooky’ superstar: What’s Phantom Wallet?

On the Solana (SOL) blockchain, everything’s about speed. After all, Solana is the crypto project that prides itself on a max speed of 65,000 transactions per second (TPS). But Solana’s speed isn’t limited to transaction finality. It’s also one of the fastest-growing smart contract platforms, earning it the nickname “Ethereum killer”  in some crypto circles.

As the Solana ecosystem expands, it's become easier to find SOL-compatible crypto wallets – but one software app stands out. The Phantom Wallet now claims 15 million users (as of this writing), making it a top choice for swapping or storing SOL. And, as Phantom's popularity swells, the Phantom development team has started integrating support for other big-name blockchains like Ethereum (ETH) and Bitcoin (BTC).

But while Phantom may be one of the hottest wallets on the market, that doesn’t mean it’s the right fit for every crypto investor. In this guide, we’ll explain what the Phantom Wallet is, its key features, and other factors to consider before downloading it. 

What’s the Phantom Wallet?

Phantom is a self-custodial software crypto wallet (aka a “hot wallet”) available as both a desktop and mobile app. Self-custodial means users control their cryptocurrency directly – without intermediaries – by holding their own private key, a cryptographic code that grants full access to their funds. With this private key, Phantom users decide how and when to move crypto in and out of their wallets.

Developers Brandon Millman, Francesco Agosti, and Chris Kalani released the first version of Phantom in 2021 as a browser extension. While Phantom drew inspiration from the popular Ethereum-based wallet MetaMask, it initially focused on improving the UI/UX experience in the Solana ecosystem. Just one year after its beta launch, Phantom reached 1 million users and introduced in-app cryptocurrency swaps for easier on-chain activity. 

The Phantom team later rolled out unique features like usernames and multichain support to make web3 interactions more seamless. Today, Phantom supports not only Solana but also Ethereum, Polygon (MATIC), Sui (SUI), Bitcoin, and Coinbase's Base network. 

What’s the Phantom Wallet used for? Key features 

Phantom aims to be an all-in-one app for securely storing digital assets and exploring decentralized applications (dApps). Thanks to its multi-blockchain support, Phantom Wallet instantly unlocks a world of possibilities in web3.

Store and manage cryptocurrencies

The primary purpose of every crypto wallet is to provide a secure place for users to hold their digital assets. While Phantom is best known for storing Solana's native SOL coin and tokens using the Solana Program Library (SPL) coding standard, it's also compatible with other popular assets like Bitcoin, Ethereum, and ERC-20 tokens. 

Stake SOL

The Solana blockchain uses a proof-of-stake (PoS) consensus algorithm, which means validators lock – or "stake" – SOL coins to help secure the network and process transactions. This means anyone who holds SOL can delegate their tokens to a validator node and earn passive rewards. And thanks to Phantom's integration with the Solana blockchain, the wallet includes a simple in-app feature that makes it easy to do just that.

Interact with dApps

Phantom’s popularity has led many dApps across the Solana ecosystem – and beyond – to build in native support. Traders can connect Phantom to decentralized exchanges like Jupiter, Raydium, and Uniswap or access non-fungible token NFT marketplaces like Magic Eden. These integrations make it possible to swap, stake, and mint directly from the Phantom wallet without giving up custody of assets.

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Is the Phantom Wallet safe?

Phantom attracted millions of users with its clean UI/UX, but it earned lasting credibility through its strong security practices. Although Phantom was involved in a $4 million exploit on Solana hot wallets in 2023, later reports found that Phantom's systems weren't directly impacted – traders who used the Slope wallet lost the most. 

Phantom also reinforces its security with features like optional integration with Ledger hardware wallet integration, an ongoing bug bounty program to identify vulnerabilities, and independent code audits to identify potential vulnerabilities.

That said, Phantom is still a “hot” software wallet that’s constantly connected to the internet. While convenient, this 24/7 online access creates potential risk – hackers may try to access users’ private keys. In contrast, “cold” hardware wallets like the Ledger Nano S or Trezor Model One store private keys offline in products, adding an extra layer of protection. 

How to set up a Phantom Wallet

Phantom makes setting up a crypto wallet simple, even for users with no prior crypto experience, thanks to its straightforward onboarding process.

1. Go to Phantom's official site

Visit phantom.app to download the wallet. You’ll find links to the mobile app (iOS and Android) and browser extensions for Chrome, Firefox, and Brave. Because Phantom has grown in popularity, scammers often create fake lookalike sites – always double-check the URL before downloading anything.

2. Create a new wallet and save your seed phrase

After installing Phantom, click “Create New Wallet” to generate a 12-word secret recovery phrase, also called a seed phrase. This phrase is the only way to recover your wallet if you lose access, so write it down – in the correct order – and store it securely offline, preferably on paper or a steel backup.

3. Open the Phantom Wallet and start using it

Once you confirm your recovery phrase, your wallet is ready to go. In the Settings tab, select a supported blockchain and choose a cryptocurrency to deposit.

For example, to transfer SOL from a Coinbase account to Phantom, open Phantom, select Solana, and click or tap “Receive.” Copy the Solana wallet address and paste that address into the withdrawal field in your Coinbase account.

4. Enable extra safety features (optional but recommended)

Phantom also offers additional features to boost your wallet’s security. You can enable biometric login – such as Face ID or fingerprint authentication – to help prevent unauthorized access. For even more protection, you can also connect a Ledger hardware wallet to store your private keys offline while still using Phantom’s interface for everyday activity.

Plug Phantom into CoinTracker's Portfolio Tracker 

CoinTracker supports integrations across the entire web3 space, including wallets like Phantom and MetaMask and centralized exchanges (CEXs) like Binance, Gemini, and Coinbase. To get started, simply link your exchange API keys and public wallet addresses. From there, CoinTracker provides a real-time snapshot of their crypto portfolio. With that data, you’re ready to generate IRS-compliant tax forms and export them directly into popular filing platforms like TurboTax and H&R Block.

Discover all the ways a CoinTracker can make filing your crypto taxes stress-free by getting started with a free account today.

Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.