The Rise of Xapo

By Corey Hoffman

Xapo, the leading Bitcoin cold storage company holding an estimated $10 billion worth of Bitcoin in underground vaults, has recently seen a substantial increase in the company’s value. Their large amount of holdings equate to nearly 6.25% of the entire BTC market, which makes them a dominant force in the industry. Not only has the company continued to increase their amount in holdings, but the company has been able to win over the trust of high valued investors that have allowed Xapo to hold their Bitcoin.

Xapo’s founder, Wences Casares started the company and also serves on the board of Paypal. Casares believes Bitcoin will one day be bigger than the internet. In an interview conducted by Unchained, Casares is quoted as saying “If you asked people in the future would they rather have the internet or their bitcoin taken away, the people would chose the internet because the internet is a source of information where Bitcoin is a source of money.” Casares goes on to explain that when he was younger he grew up in Argentina and he saw his family lose everything they had at least three times throughout his life due to the government and unsound monetary policies.

As of now, the amount of people unbanked in the world is 1.2 billion so there is an obvious need to help those who are unaware of the regulations and procedures that go into banking.

Casares was introduced to Bitcoin in 2011 after a friend had asked him to transfer him money through bitcoin since the Argentina government had made it nearly impossible for people to send fiat money to one another. Being very skeptical of Bitcoin, Casares was finally persuaded into buying $2,000 worth of Bitcoin when he saw a transaction of his go through right away. Thereafter, he was able to persuade investors to buy bitcoin because of its ease of transfer. In one infamous investor pitch he transferred $250,000 worth of Bitcoin around a dinner table from phone to phone right in front of each investors eyes. Potential investors marveled as to how quick and cheap transactions could be made.

In the same Unchained interview, Casares stated that during the years 2011-2013 he was not able to convince anyone to invest in Bitcoin and to believe in its merits. After two years of trying, finally, at the start of 2013, the price of Bitcoin began to rise which helped validate bitcoins value and in effect helped the company's pitch.

After being asked why he decided to start the company, Casares replied with a more unorthodox response of, “I try to grow bitcoin as a whole, not necessarily my company. I hope one day my grandkids ask me what did I do during my career, and hopefully I am able to answer them with, I was able to help the growth and success of Bitcoin.”

In the interview, Casares also comments on how difficult it is to deal with different countries and the hardships each one endures. Some countries need a strong banking relationship, whereas others are not in such need of a solid relationship. He explains how each country is very different and extremely specific in terms of its cash transfers. Therefore Casares hopes Xapo is available to ease the transition for these countries. Xapo is home to some of the larger global institutions, including GBTC (US), XBT (Europe) as well as CBT (Canada). Casares, explains that some of their largest customers in terms of holdings, come from institutions that can have between 10-200 million in bitcoin. These institutions benefit from the company’s zero transaction fee policy.

In order to convince customers of the undeniable trust Xapo offers, the company relies heavily on five bunkers they have built globally to store the bitcoin. With their largest bunker being in Switzerland. The company explains that 97% of their customers holdings are in “cold storage”. This means that they sit on servers which have never been online and will never be online. The five bunkers are spread over numerous continents, filled with vaults, and use five separate keys (multisig) for each address which makes it nearly impossible to hack.

With the rise of similar companies aiming to do exactly what Xapo does, Wences Casares believes that more competition only validates what they are doing. He even goes as far as saying that he would like to see even more companies make it their main goal to hold Bitcoin, because he believes the this will ultimately help the acceleration of bitcoin.