This information published by Bloomberg is based on feedback from two of the storage providers’ anonymous clients. This was further backed up by another source that says that the amount is pretty close to the $10 billion mark.
This is a surprising risk for a storage provider who is so new to the cryptocurrency industry. Xapo has only been in the market since 2014 and recently made waves by converting a former Swiss bunker into a Bitcoin storage facility in 2017. Before this addition to their facilities, the start-up was struggling to get validity since it had just moved to a foreign country, which was a problem for quite a few regulators.
In the past, the storage concept was not exactly given a lot of attention in the Bitcoin world. This is because blockchain technology allows for people to store cryptocurrency themselves. However, this opinion has turned around and many are now praising the cold storage option despite the centralized set-up and lack of control being against the spirit of Bitcoin. Investors have embraced it for better security for their bitcoins.
Xapo
Cold Storage Gaining Popularity
In a statement, Ryan Radloff, CEO of CoinShares, said
Everyone who isn’t keeping keys themselves is keeping them with Xapo. You couldn’t pay me to keep it with a bank.
The demand for cold storage has increased in recent times as the value of Bitcoin surges. Investors who have their money in bitcoin are under constant threat from hackers and criminals who want to steal their bitcoin.
This has resulted in Xapo doing brisk business in protecting bitcoins. Right now, Xapo’s total “deposits” exceed those of 98% of the 5,670 banks in the United States. It doesn’t actually store any bitcoin but only the private keys that allow people access to their funds.
Xapo currently only accepts bitcoin and operates by giving clients access to the vault via an app. The company even has a debit card that allows for Bitcoin transactions. Its server vaults are its main attraction as they are spread out among five continents in secure and private locations. They are also protected by 24/7 surveillance and armed guards. Xapo bills itself as the first crypto vault completely secure from hacking and bankruptcy and many investors believe this claim.