Things in the cryptocurrency universe develop quickly.
Xapo was founded just a few short years ago, but based on its estimated bitcoin holdings – its assets are larger than most of the banks in the USA. While there is no official figure for how large their bitcoin holdings are, Bloomberg estimates Xapo’s holdings at near USD 10 billion.
The idea of banking in the crypto space is a little different than the established financial economy. Bitcoins can’t actually be ‘stored’ because they exist on a blockchain, but the access keys have become extremely valuable, and this is where Xapo comes into the picture.
After receiving an initial investment from Greylock Partners of USD 20 million, founder Wences Casares began building what became Xapo. Now they are reportedly in possession of one million bitcoins, which is about 7% of the global supply.
Bitcoin isn’t an inherently safe way to store funds. Because of the anonymity associated with the system, hackers can make off with huge sums of bitcoin in some situations. This led Xapo to create a system of off-line storage facilities and withdrawal protocols to protect their clients.
Xapo is said to maintain facilities on five continents, one of which is built into a Swiss military bunker that Xapo took over to use as a bitcoin vault. The facility is said to have fingerprint scanners that detect a pulse to discourage the use of amputated limbs in the course of a heist.
They also offer what would be considered merchant banking services in the established financial system and allow their customers to manage funds remotely. Xapo is bitcoin-centric, and their founder is a die-hard believer that the future of cryptocurrency is bitcoin.
Xapo is probably the first real crypto bank in the world and, given their list of backers, this industry is just getting started. Ex-Fortress trader and Bitcoin supporter, Mike Novogratz, is said to be involved with Xapo, despite the fact he is working to open his crypto merchant bank.
As the market for both cryptocurrency and DLT-based services grow, companies like Xapo will probably need to adapt to a changing landscape. Ethereum is a newcomer to the world of cryptocurrency, and over the course of two years, it has grown to be the second most valuable coin in existence.
There is likely room for more companies like Xapo, especially given the desire by a wider group of people to integrate cryptocurrency into their daily lives. Bridging the gap between the crypto world and the local market will be profitable for any company that can do it reliably, especially on a retail scale.