The normally tight-lipped bitcoin services provider Xapo has announced a slew of new updates focused on bolstering its security offerings.
Though the move allows the company to remove fees for its signature vault storage service, adding multi-signature authorization to that offering and completing a Service Organization Control 2 (SOC2) Type I Audit. But it is perhaps its partnership with Silicon Valley startup Satellogic that showcases the extent to which it seeks to secure the bitcoin it holds for customers.
Today Xapo announced it will work with Satellogic to locate specific elements of its security architecture within a low Earth orbit satellite that its partner aims to use to take high-quality images in real time. Though it didn’t elaborate further on the measure, citing security reasons, Xapo suggested that the ability to maintain data as well as physical and jurisdictional security were key elements that encouraged the deal.
CEO Wences Casares explained that the measures are all aimed at increasing the company’s security, which he suggested is paramount in light of the industry's continued security struggles.
He told CoinDesk:
”A lot of the people who have large amounts of bitcoin, that’s what they care about most – security. Nothing is more important to security than keeping private keys offline. We’ve seen the problems of that recently, you can keep them offline but when you bring them online, that’s when compromises happen.”
Sattelogic CEO Emiliano Kargieman also explained that with the partnership his company aims to showcase the power of its technology to new markets.
"Our partnership with Xapo allows us to showcase the integration of our satellite platform into mission-critical, daily processes in the financial industry, while we play a key role in helping the company develop the most secure storage service in the bitcoin space," Kargieman told CoinDesk.
Xapo's emphasis on security is not surprising given that at launch it was billed as “bitcoin’s Fort Knox", a reference to the famous US bullion depository.
However, it could be seen as a return to the company’s original value proposition, as 2014 saw Xapo introduce a number of features in addition to its service aimed at more everyday bitcoin users, including hot wallet accounts, a dedicated tipping button and bitcoin debit cards for international users.
Offline security still necessary
For example, bitcoin security services provider BitGo has called for the widespread adoption of multisig wallets as an alternative that will allow users both security and usability while preserving the digital nature of the bitcoin currency.
However, Casares indicated that Xapo sees a bitcoin ecosystem where there is still demand for cold storage solutions.
“I think that they are different things,” he said. “It’s like saying in the world you only need checking accounts – that’s not true, you also need savings accounts.”
Framing Xapo’s vault accounts as savings accounts, Casares said his company’s main competition in the consumer market is not with any bitcoin service provider, but with homemade cold storage solutions.
Further, he said the vault service is also a bid to attract new markets, such as larger institutional investors that may see an opportunity given the current price of bitcoin.
“We also see a lot of large investors that are on the verge of investing in bitoin, but their main concern is how to keep it safe,” Casares added.
Refunds for vault users
It's not only new customers that will benefit from the changes to the Xapo Vault’s pricing. The company pledged that existing customers who have previously paid annual storage fees will now receive pro-rated discounts along with the improved features.
The merger of multisig and cold storage has also resulted in what the company dubbed “deep cold storage”, which aims to utilize custom servers, as well as three-of-five multi-signature transaction authorization, in what it called an industry first.
“Xapo’s deep cold storage security architecture means that private keys are created, stored, and maintained offline, in servers that have never and will never touch a network, even when used to sign transactions,” the company said.
It further indicated that deep cold storage would use radio wave-blocking Faraday cages, “military-grade security controls” and be stored in “reinforced underground bunkers” at its Switzerland facility.
Xapo added that it expects to make further improvements to its security architecture in 2015. Its SOC2 audit was conducted by Burr, Pilger & Mayer LLP.
Images via Nell Frabotta (The Hatch Agency) and Shutterstock