The Wealthy Are Hoarding $10 Billion Of Bitcoin In Bunkers

The value of all the bitcoins sitting in underground bunkers owned by wealth-management startup Xapo has been the subject of intense speculation ever since the company first allowed journalists into the catacombs where the family offices of the world's wealthiest people stash their digital gold.

Now, Bloomberg - after conversations with two purported clients - has produced a figure: Somewhere around $10 billion. Several sources said that number would be "a good approximation" - though the price can still be volatile.

Bunker

Interestingly enough, with its reputation unmatched by other firms, Xapo has in effect created something more than just a bitcoin vault. It's essentially the first private bank for rich bitcoiners.

Because in addition to its security offerings, Xapo also provides customers with a bitcoin debit card and access to a bitcoin trading desk.

Already, the company's holdings - which constitute roughly 7% of the global bitcoin supply - are higher than 98% of the 5,670 banks in the US.

"Everyone who isn’t keeping keys themselves is keeping them with Xapo," said Ryan Radloff of CoinShares, which has more than $500 million of Bitcoin stored at Xapo. "You couldn’t pay me to keep it with a bank."

Founded by Argentine entrepreneur and PayPal board member Wences Casares, who is widely credited with turning the Valley's VC billionaires on to bitcoin, the company has amassed a network of underground vaults, including a decommissioned Swiss military bunker.

Bitcoin

Thanks to Cesares' reputation, Xapo has managed to attract venture investments from some of the Valley's biggest names, including LinkedIn Corp. co-founder Reed Hoffman and former Wall Street trader Mike Novogratz, who is, of course, is in the process of setting up his own crypto "merchant bank" that might end up competing with Xapo.

It also has relationships with major crypto investment firms, such as Grayscale and CoinShares.

Xapo's clients aren't limited to wealthy individuals. First Block Capital, one of Canada's first registered crypto firms, chose Xapo to be its custodian - the first sign that the institutional market for crypto custody could some day dwarf Xapo's private business.

"Every part of their DNA is geared to security," said Sean Clark, First Block’s founder, who noted the vault’s fingerprint scanners were equipped with a pulse reader to prevent amputated hands from being used. "Whenever we make big transfers they FaceTime us, we have duress words, if it’s big enough they’ll fly out to see us."

To pursue institutional investors, Xapo President Ted Rogers hired Peter Najarian, a veteran of emerging-market trading at UBS Group and Royal Bank of Scotland Group, to oversee outreach to pension funds, private banks, assets managers, family offices and hedge funds.

The perceived lack of an institutional-grade custodial solution for Bitcoin has been one of the sticking points for many money managers looking to try the asset class. Xapo says its already offering precisely that solution. If it persuades them of its merits, the implications for Bitcoin would be profound.

"A fraction of that kind of institutional money flowing into the space would be a tidal wave," Najarian said.

However, there's one factor that could limit Xapo's growth, particularly as the crypto market outside of bitcoin grows (assuming the alt-coin universe hasn't already reached its zenith). The company only works with bitcoin because of Cesares' belief that it alone will succeed. 

Bitcoin

For everybody who's not wealthy enough (or too cheap) to pay a third party for an elaborate private-storage scheme, individuals can always store their private keys - the tool that gives them access to their bitcoin - on a hard drive that's air-gapped from the Internet.

Of course, no solution is 100% safe from hackers and thieves. And at the end of the day, that reality might be enough to indefinitely stave off the "mainstream adoption" that bitcoiners say is just around the corner.

Comments

Son of Captain Nemo Fri, 05/11/2018 - 18:06 Permalink

Not Gold?!!!...

Then that's GOOD!...

Send the "barbaric relics" Au and Ag to the Russians and Chinese who appreciate the only store of value THERE IS and that appear to be only too happy to keep "stacking" at those generous BOE and Federal Reserve $prices!!!

Gotta wonder sometimes if the banks didn't get together Western CBs to Eastern CBs...

We gave you the crown jewels of all our IT technology to build in your country because you have all of that wonderful cheap energy THAT WE NO LONGER GOT...  You're dropping all of your $USD Ts for the PM prices WE OF COURSE "SET".... 

Meanwhile back in North America all we have le ft is useless bottom feeders we created because we didn't take those profits to build new cutting edge technologies... And instead gave it to a useless bloated MIC that has nothing but drugged out fat bodies in it since this lie (https://www.wikispooks.com/wiki/9-11/Israel_did_it) that was supposed to reap us the last hold of the Middle Easts oil which isn't going according to plan?...

Sooooo....

Since you have all the oil, gas, gold and silver THANKS IN LARGE PART TO U.S. ... We'll give the lemming/sheeple all the drugs they can consume with their favorite sports events to watch and lots... and lots... of cryptocurrency to complete there "FANTASY" before we PULL THE PLUG ON IT!... (https://www.youtube.com/watch?v=m3zSDdm-SHI)

All that the 1% in North America, UK, Israel and EU ask for in return is a nice little Dacha by the Black Sea when WE'RE "DONE" at a good price!!!

Bitchface-KILLAH J S Bach Fri, 05/11/2018 - 18:44 Permalink

Putting all of your crypto in an underground bunker run by a third party?  Seems like a great example of.... centralization.

Perhaps it is just an inane part of the human condition that we must always empower this rentier class to own and manage things for us?  It's never been that bad of a burden on me to own a Bitcoin myself or own a 10 ounce gold bar myself.

In reply to by J S Bach

Government nee… JibjeResearch Fri, 05/11/2018 - 19:20 Permalink

Let's assume the SHTF and you, the trillionaire who kept your ethermunny safe in a bunker, emerge with it, unscathed.  You survey the wreckage and after weeks of searching, find Bartertown, the place where all the survivors come to trade.  Hungry to buy the parts of the world you didnt already own prior to SHTF, you see a shank of fried nigger hanging up in the market.  You offer 0.01 bitcoin for that tasty fried nigger-shank.  The vendor looks at you steadily, and says 'gas, ass, or grass'.  That would be your queue to bend over and pull your pants down.

In reply to by JibjeResearch

Akoniti Bitchface-KILLAH Fri, 05/11/2018 - 19:50 Permalink

"All" HODLING in the same bunker? If by that you mean ~7% of the total market cap, you are correct.

A significant portion to be sure, since it's nearly half the ENTIRE MARKET CAP of BCH (aka NOT Bitcoin), but not even 1/10 compared to total cap of BTC (aka THE REAL BITCOIN).

In reply to by Bitchface-KILLAH

0valueleft GodSpeed_00 Fri, 05/11/2018 - 18:52 Permalink

Have ya re-thunk that statement yet? Go past your numerical TP theory and explain what network you plan to type them into. Oh wait you mean after they get the grid back up, I get now. You wait like a Puerto Rican. Don't worry though the tarp guy will let your wife blow him for nice 20'x20'.

EMP proof with diversity, hold your nose and buy a little gold. Knucklehead. 

In reply to by GodSpeed_00

HRClinton 1981XLS Fri, 05/11/2018 - 19:48 Permalink

How DUMB can they be?  Speaking as a millionaire BTC HODLer, now living in Switzerland, the safest place to keep the HODLed CC, is...

1. That NO ONE KNOWS that YOU [Name, Address] have it.

2. Where NO ONE KNOWS where your Deep Freeze is.

Having it in a "CC bank" makes it mortally vulnerable to the most dangerous Thief of all: The fvcking Government that issues fiat chits.

JF Christ, do they deserve to get butt-fvcked by a horny group of Ebola-infected bushmen! (Can you picture that?)

In reply to by 1981XLS