This Bitcoin horde belongs to wealthy individuals who have chosen Xapo as their Bitcoin custodian of choice. The vaults are said to be some of the most secure in the world. The firm has been able to build a network of such high-security Bitcoin storage facilities in five continents.
Wences Casares is a colossal figure in the Bitcoin community. The 44-year old was in the Patagonia region of Argentina, to sheep ranchers.
Casares grew up at a time when the country experienced some of its worst case of inflation, and this reportedly shaped his outlook on life. By the dawn of the new millennium, he had sold 75 percent of Patagon, a financial services website that he had created. The sale amounted to $529 million. In 2013, he sold Lemon, a digital wallet platform for $43 million to LifeLock. After the deal of Lemon, he decided to focus on Bitcoin custodial services. By this time, Casares had acquired a considerable number of Bitcoin.
Xapo holds about 7 percent of the total Bitcoin supply in circulation. It is one of the most trusted wallet service providers in the industry. The company’s success is the result of Casares’ effort in convincing Silicon Valley millionaires and billionaires to store part of their wealth in Bitcoin. Despite being only four years old, Xapo already holds more deposits than 98 percent of the banks in the United States.
The company is backed by notable individuals like Reid Hoffman and Mike Novogratz. Hoffman is the co-founder of LinkedIn while Novogratz is a successful Wall Street Trader who is gearing up to establish a crypto merchant bank. Through his VC firm, Greylock Partners, Hoffman invested about $20 million in Xapo in 2014. Casares was responsible for getting Hoffman started in Bitcoin by convincing him to buy the cryptocurrency.
According to Hoffman, Xapo offers superior Bitcoin custodial services being one of the first firms to recognize the importance of storage and security infrastructure for high-value Bitcoin holders. The firm takes great pride in its robust security measures that include cold Bitcoin storage in underground bunkers, shielded from electronic interference. The computers in the various complexes have no connection to any network. These storage units hold private keys to large Bitcoin accounts that run into millions of dollars. Commenting on the pedigree of Xapo’s services, Ryan Radloff, the Coinshares co-founder said that:
“Everyone who isn’t keeping keys themselves is keeping them with Xapo. You couldn’t pay me to keep it with a bank.”
Coinshares has over $500 million worth of Bitcoin stored at Xapo. Retrieving funds from a Xapo wallet can take as long as two days. There are a plethora of vetting procedures that must be completed before Bitcoin can be released from Xapo’s holdings. Security is an essential component of the company’s operations, a fact reiterated by Sean Clark, founder of First Block:
““Every part of their DNA is geared to security. Whenever we make big transfers they FaceTime us, we have duress words, if it’s big enough they’ll fly out to see us.” ”- Sean Clark
Clark also said that the fingerprint scanners at Xapo facilities have pulse sensors to prevent amputated hands from being used to bypass scanners.
Despite the successes of the company so far, Xapo is not without its detractors. Critics say that the firm’s operation is counterproductive to a healthy Bitcoin commerce ecosystem where instantaneous transactions are highly desirous. The number of bottlenecks that must be navigated before funds can be transferred has been criticised by some quarters. Commenting on the issue, Xapo president Ted Rogers said that:
“It’s a subject we discuss a lot, and we believe Bitcoin won’t reach the mainstream if people have to hold their private keys. It’s a pretty high hurdle technically to be your own bank with lots of security.”