The Future of Bitcoin Security
The team at Greylock seeks out companies that have an untapped market opportunity, a massively disruptive technology and a world-class entrepreneur at the helm. This is precisely why Greylock is so excited to be co-leading the series A1 round investment in Xapo with Index Ventures. I am joining as a board observer.
Bitcoin has the potential to be a massively disruptive technology. It is the leading digital currency and it’s growing fast. As an investor and technologist, I am interested in bitcoin on three levels: As an asset, (i.e. a digital alternative to gold); as a currency (to create a new transactional layer on the internet); and as a platform (to build alternative kinds of financial applications).
The currency part of bitcoin is well underway. According to CoinDesk, approximately 60,000 merchants around the globe accept bitcoin. In 2014, major brands began to accept bitcoin. And eBay added a ‘virtual currency’ option to its US and UK sites.
But to truly succeed, bitcoin also needs security. Bitcoin’s popularity has made it a target among hackers and thieves. Unfortunately, it is both costly and risky for consumers to build their own technology infrastructure, process and physical infrastructure to secure their bitcoins.
Xapo has created a system where average consumers can be comfortable and secure with holding and using bitcoins. The company has developed a combination of a bitcoin vault, a bitcoin wallet, and soon, will offer a bitcoin debit card.
Xapo controls a network of underground vaults to store customers’ bitcoin. The vaults, which store bitcoin on Xapo’s offline servers, are in secret underground locations around the world, are staffed by armed security guards, and are protected with biometric access. Xapo’s Vault is the first bitcoin vault in the market and all deposits are fully insured in a manner similar to FDIC insurance.
Where the vault is all about security and safety, the wallet is all about convenience and ease of use. And Xapo Wallet is free to use. There are no fees and it’s quick and easy to transfer and move money all around the globe in seconds (both online and on mobile).
And when it is released, Xapo Debit will be accepted by any business in the world that accepts debit or credit cards. The balance on a Xapo Debit Card is tied to the bitcoin in the customer’s Xapo Wallet. This is an important distinction from any other bitcoin card, which require customers to plan ahead by manually converting bitcoin into their local currency before purchases. With Xapo, a customer only deals in bitcoin and the debit card is a seamless extension of the Xapo Wallet.
The founder of Xapo, Wences Casares, is the kind of entrepreneur we partner with. He is product-centric and is very serious about building and scaling game-changing companies. I got to know Wences because he and I are both on the board of Endeavor. He has shared with me incredible stories about growing up as the son of a rancher in Argentina to becoming a technology entrepreneur. I am excited to partner with him for the long term as he builds Xapo.
“Bitcoin has the potential to be a massively disruptive technology. It is the leading digital currency and it’s growing fast.”