Xapo is a widely-utilized cryptocurrency wallet and value and its president recently revealed that the platform has adopted what is called “Segregated Witness (SegWit). SegWit is a scaling solution developed by Bitcoin Core’s development team.
The adoption of SegWit is noteworthy for several reasons, especially when it comes to Xapo. According to Tom Metcalf, a Bloomberg correspondent, Xapo has a cold wallet stored in underground bunkers in Switzerland and there is purportedly over $10 billion worth of Bitcoin. This is a staggering amount and it is much more than the 5,670 banks in the US have. Xapo’s influence over the market is much wider too – it currently deposits more than 98 percent of banks in the United States.
Various investment companies store in Xapo’s cold wallet, including CoinShares, an investment company. CoinShares allegedly has more than $500 million worth of bitcoin stored in Xapo’s cold wallet and the platform’s CEO, Ryan Randloff recently stated that those who store in Xapo’s vaults are large-scale investors who do not hold or manage their own private keys. In Randloff’s own words, “everyone who isn’t keeping keys themselves is keeping them with Xapo.” Such a statement says a great deal about Xapo’s trustworthiness.
The founder of CoinShare is not the only one to express such sentiments. Recently, Reid Hoffman, the billionaire investor and LinkedIn co-founder stated that Xapo is one of the very few and first successful companies committed to commercialized custodial and security functions in the cryptocurrency industry.
As he stated, “They’re the first folks who recognized custodial and security functions would be key. He made the pitch in the morning and in the afternoon I called him with an offer.” In 2014, Hoffman invested more than $20 million in Xapo.
It is clear that CoinBase and Blockchain have developed a significant influence over the consumer market and individual investors. However, Xapo is growing to be a key player as well, especially with its showing dominance over the institutional market within the cryptocurrency industry and its direct deals with institutional investors and retail traders.
The downside of Xapo is that transfers take 24 hours, however it does not seem that the slow transfer time has stopped large-scale investors. Although investors do not move small amounts of bitcoin, they still frequently transfer much larger sums in and out of the vaults, and at a fee as well.
To resolve this issue, Xapo is planning on integrated SegWit, which will enable the processing of large sums of bitcoin on the bitcoin blockchain network. The transactions will be SegWit enabled, which means that the costs will be drastically decreased and will only burden the main blockchain network.
When it comes to information processing at Ethereum and other smart contract-based blockchain networks, they have yet to achieve the scalability levels of Bitcoin. As a result, they are working on innovative solutions that include sharding and plasma to divide the blockchain networks into chunks. This is expected to allow for more efficient information processing.
Additionally, in terms of bitcoin’s blockchain network, it is currently experimenting with Lightning Network to determine its viability as the second-layer blockchain solution for the processing of smaller transactions, but in a larger capacity. And it is considering SegWit as its first or base layer for scaling. The adoption of SegWit will enable the platform to develop into a technology that will change bitcoin’s current status as a store of value to a scalable currency. There is no doubt that the use of SegWit by Xapo achieves such a goal as well.