$10 Billion of Bitcoin Is Hoarded in Xapo's BunkersMay 10, 2018, 11:01AM
Xapo is hoarding nearly $10 billion worth of Bitcoin in it's bunkers. But does high-grade security benefit the Bitcoin market?
Deep in the Swiss Alps, Xapo maintains a secure bunker that stores Bitcoin on behalf of its clients. Xapo is a digital wallet service, but it's not just any wallet: two of the company's clients recently revealed that Xapo stores approximately $10 billion worth of Bitcoin. It's a monumentally secure storage tool for those who use it, but what effect does such a locked-down service have on cryptocurrency adoption?
Wences Casares, an entrepreneur, began Xapo in 2013 with the expectation that Bitcoin will become the world's sole successful cryptocurrency, and he sought investors who shared the same vision. By any measure, he's partly on his way to bringing his vision about: Xapo holds about 7% of all of the Bitcoin in existence -- worth more than the holdings of nearly any given bank in the United States.
Retrieving cryptocurrency from Xapo's wallets is painstakingly rigorous -- doing so involves extensive user verification, approval from multiple vaults, and a two-day waiting period. Physical security is just as dramatic: the bunker incorporates blast doors and checkpoints with bulletproof glass and utilizes Faraday cages to protect against EMP attacks.
Xapo's security measures are extreme but necessary. Thefts from online wallets are endless: in 2017, hundreds of millions of dollars worth of cryptocurrency was stolen from centralized wallets and other services. Most recently, $150 thousand worth of Ethereum were stolen from MyEtherWallet. The good news is that Xapo's high-grade security measures bring in institutional investors, who have more money to invest than typical investors: "A fraction of that kind of institutional money flowing into space would be a tidal wave," a Xapo representative said.
But there is a downside: Xapo's storage sites serve as cold storage, which means that the cryptocurrency is sitting unused until it is withdrawn by its owners. Governments around the world are also hoarding Bitcoin on a large scale without any clear plans to circulate it, and holding cryptocurrency in this stagnant manner prevents wider adoption.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.