Bloomberg has reported that Xapo, a Bitcoin storage provider holds 7% of the world’s total Bitcoin supply in its vaults. This amounts to roughly $10 billion. If accurate, the overwhelming demand for cold storage of Bitcoins, places the deposits at Xapo above those of 98% of all the U.S. 5,670 bank deposits.
Storing private keys is a risky business as they can easily be stolen, lost, or damaged. Wences Casares recognised this fact and in 2014 he established Xapo. Over the last four years, Xapo has been carefully building out its secure network of underground vaults on five continents, including a famous decommissioned Swiss military bunker. The building out stage proved to be challenging. Xapo initially did struggle to convince the worlds millionaires and billionaires that Bitcoin would be a global and high-value currency of the future.
Xapo combines the convenience of an everyday Bitcoin wallet with the security of a deep cold storage vault.
The company does not actually store Bitcoin, which exists on public distributed ledgers, rather, the vaults store those private cryptographic keys. Cryptocurrency funds have now started to see the value of a secure cold storage facilities. CoinShares, a UK-based investment products and research firm, has deposited around $500 million of client funds with Xapo. Speaking to Bloomberg, CEO of Coinshares Ryan Radloff said, “Everyone who isn’t keeping keys themselves is keeping them with Xapo. You couldn’t pay me to keep it with a bank.”