The Xapo cold storage service is rumored to house more than $ 10 billion in Bitcoin.
You are wondering how to protect your precious crypto currency? A large number of Bitcoin investors are locking their fortunes in underground storage facilities around the globe to keep people from stealing.
Xapo, a Hong Kong-based company that provides Bitcoin purse and wallet services, currently holds nearly $ 10 billion in its storage facilities.
This number corresponds to nearly 6% of Bitcoin’s current market capitalization, and they are being held by a single entity, making Xapo one of the largest crypto currency repository services in the world.
Xapo is one of the first companies to focus on security in Bitcoin, which has been extremely turbulent since the concept of virtual currency was formed. In fact, the first major Bitcoin theft took 25,000 bitcoins (valued at $ 231 million at the time) – in 2011, when the Bitcoin value was only $ 19.
Xapo’s clients will be able to lock down their crypto money in one of the repositories located in secret locations on three different continents, guarded by biometric authentication and defense guards. Private keys to open a customer’s wallet are stored in those repositories, and users are only granted access if their identities have been carefully verified.
Restrictions on common wallet services have forced encrypted owners to switch to extreme security measures like this to store their huge value investments.
Transactional wallet services provide the simplest user experience, especially for those who regularly trade, but with the lowest level of security. Many exchanges have been hacked and appropriated by significant hackers, including Mt. Gox, Bitfinex, Poloniex, Bitstamp and Bitfloor.
Online wallets are considered a safer option, but they are also threatened by phishing attacks and the misappropriation of private keys.
Another type of wallet is the hardware wallet – which is considered to be even safer – but also inevitable hacking. In March, a 15-year-old programmer managed to successfully hack the Ledger Nano S and even revealed a security flaw for the manufacturer.
For the Xapo service, although it significantly improved the security concerns associated with Bitcoin storage, it completely eradicated the original purpose of the crypto.
Why? By locking your Bitcoin at a remote location in the real world, it does not sound like an ideal way to secure a revolutionary digital currency.
It will take up to 48 hours for your Bitcoin to be transferred from the Xapo repository to your Xapo wallet in case you want to withdraw money, which is on business day. If you withdraw money at the weekend, the waiting time may be up to 4 days.
If you intend to trade your bitcoin into other crypto, you’ll even have to wait longer, and have to pay a bitcoin transfer fee for another wallet.
Xapo’s services are suitable for storing Bitcoin in the long run as you store gold, and will be suitable for most investors. But for those who only own smaller investments, or those who regularly trading coins, Xapo’s services are not very meaningful, as both the fee and the time of the transfer is too expensive.
Xapo’s solution to Bitcoin security is ineffective for widespread application, and we will need to find better solutions.
While it is interesting to know that there is a service like Xapo that exists in the world, it is very urgent to find better solutions that every investor can take advantage of. Hopefully, we will see a better security option soon: Ethereum is currently investing in projects aimed at solving the security problems of all existing wallet services.
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