Xapo, a provider of secure storage for bitcoins, has raised a $20 million Series A financing round led by Benchmark Capital, with participation from Fortress Investment Group and Ribbit Capital. The company essentially offers two services—a bitcoin wallet and a bitcoin vault. The wallet allows users to readily access and transfer their bitcoins, while the vault allows users to securely store larger amounts of bitcoins that become harder to access due to multiple security layers. While the wallet is free to use, the vault costs users an annual fee of 0.12% for each deposit.
The service, which is fully insured, works by placing deposits in a computer that has never been and never will be connected to the Internet, encrypting all the data, segregating it into different chunks and copying it onto external drives and paper. Xapo then stores those backups in physical vaults in geographically dispersed locations.
After the Mt. Gox disaster, in which the bitcoin exchange crumbled after supposedly being hacked and losing about $470 million worth of the currency, a service like Xapo might be just what the industry needs. Xapo will reportedly put the funding towards fortifying its security infrastructure.