Why the Rich Elite Are Stockpiling $10 Billion Worth of Bitcoins in Underground Vaults Instead of Banks
Silicon Valley billionaires are making a bet that bitcoin is here to stay, and with it, a threat that will never go away — theft by hackers. That's why Xapo's biggest backers have entrusted billions of dollars' worth of cryptocurrency to underground bunkers.
"Everyone who isn't keeping keys themselves is keeping them with Xapo," Ryan Radloff of Coinshares said, referring to the precious codes that give bitcoin holders the ability to move and spend the cryptocurrency that they own.
It's the first thing that every bitcoin owner should know even from the early days of cryptocurrency, and more so today. Anyone who gains access to the keys also gains absolute, untraceable access to cryptocurrency funds, and given the nature of the blockchain that supports bitcoin, there's no getting stolen bitcoin back once they've been moved, as Bloomberg pointed out.
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Thus the extent that Xapo goes through in securing the keys that their clients have entrusted to them. Wences Casares, entrepreneur and founder of the startup, has built bunkers and underground fortresses in five continents to keep keys and crypto funds safe from prying hackers.
"We've developed a new standard in bitcoin security that protects your assets by using man, machine and even a mountain to keep your money safe," Xapo claimed on their official website.
With the rapid rise of bitcoin over the past couple of years, cryptocurrency assets held by Xapo are now worth billions — not something a bank building can protect on its own, as Radloff felt.
"You couldn't pay me to keep it with a bank," he said. Radloff has more than $500 million worth of Bitcoin stored across Xapo's fortified bunkers.
According to two Xapo clients, they estimate that the startup is now holding about $10 billion in Bitcoin; the exact amount fluctuates from minute to minute, as is the nature of cryptocurrency prices on the market. Still, that already amounts to about seven percent of all the Bitcoin in the world today, and at that value, Xapo is now safeguarding a hoard that places it at the top 2 percent of all the banks in the US.
First Block Capital's Sean Clark took special note of the extent Xapo prepared its vaults. "Every part of their DNA is geared to security," he said, as he pointed out how the fingerprint scanners throughout the facilities were combined with a pulse reader to prevent thieves from using amputated hands.
Blast doors, reinforced concrete and armed guards protect encrypted computer servers that hold the keys vital to controlling these vast amounts of cryptocurrency. These servers are isolated from the Internet or any network at all, as well.
All these safeguards, however, do defeat one of the most attractive features of Bitcoin — convenience via digital transfers. "It's a subject we discuss a lot, and we believe Bitcoin won't reach the mainstream if people have to hold their own private keys," Xapo President Ted Rogers admitted.
