Xapo
3.5 stars - "Xapo" Xapo
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Xapo

Written on: May 25th, 2015 | Author: David M
Important info
  • Wallet Type:  Web
  • Verification:  Trusted Server
  • Security:  Cold Storage
  • Founded :  Wences Casares
  • Open source:  No
  • Crypto supported:  bitcoin
  • Vulnerability to malware:  Vulnerable
  • Private key stored:  server side
Pros and cons
  • Insured wallets
  • Famous cold-storage solution
  • Issues debit card
  • Horrendous support
  • Might not value your privacy as much as you do
  • Difficult and intrusive set up

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Summary

Xapo likes to do things big. They brand their cold storage “deep” cold storage, and provide it free to customers. They describe a network of armed guards and and biometric scanners across diverse locations, each serving to guard private key fragments. They chat about sending part of their security structure into low orbit, to ensure that only cosmonautically-inclined hackers would have a chance of breaching Xapo’s server. They have a debit card that is connected directly to user’s account, and so they provide both security and an easy bitcoin off-ramp.

Where they fail is in their management of the little things, and by little things we mean their customers. Of every bitcoin service we have reviewed Xapo has the absolute worst support. The internet is flooded with stories from customers of their inability to breach Xapo’s wall of silence. This author himself written four separate emails to Xapo, in the capacity of both of an interested customer as well as the owner of a bitcoin review site, and has never received a response. This, combined with a really poor debut for their debit cards, rife with hidden fees and bugs, draws a picture of a company with its head in the clouds and feet suspended somewhere mid air.

According to CEO and founder Wences Casares, Xapo aspires to be the Bank of America of digital currency. It’s financial backing and infrastructure gives this wallet company as good a chance as any. However, all gripes about Bank of America aside, they actually demonstrate respect for their customers who entrust them their money. It’s a lesson Xapo would do well to learn. 

To make a long story short - if you are looking for a secure wallet, try trezor or, if you do not want to pay for cold storage check out our wallet comparison sections.  If you are were interested in buying bitcoin with Xapo due to their debit card, just go for coinbase.  Yes, their support also sucks, but at least they will eventually respond - and you are less likely to run into a problem.  And check out our debit card comparison for card alternatives.  Haven't managed to turn you off Xapo?  So read on, dear reader.    

Xapo Security

Famous for its "deep cold storage", Xapo boasts a network of offline servers and paper wallets protected by biometric scanners, radio-wave blocking cages and armed guards.  These "vaults" are distributed across multiple geographic locations ensure that, even if a government were to bypass the cryptographic and physical security measures employeed, all other vaults would remain intact.   More importantly, the vaults are insured by the Meridian Insurance Group, so even in the unlikely event of a breach, customer funds are protected.  Xapo has recently been making waves with a plan to locate specific elements of its security architecture in a low Earth orbit satellite. Lest you immediately think that this smacks of a publicity stunt, Xapo explains that the satellite possesses a piece of data that can never change, absent a physical breach of the satellite. If there is a security breach back on Earth, the way in which the satellite communicates will change, thus instantly raising the alarm bell.

Entrance to the vault requires inputting your password, and you can choose to set up two factor authorization as well, which is recommended. Additional users can be granted access to your vault as well to implement multiple signature functionality. Minor irritant - every additional click forward or backwards through the vault requires an additional password input, which seems redundant and interrupts user flow.

wallet

Transferring money into the vault requires inputting address and ID number, and depending on your location, they might refuse service. US and European customers should be fine.  Vault withdrawals are time delayed by 48 hours, during which time a series of authentication measures are undertaken to ensure request integrity.  The progress of this authentication procedure can be followed in a users transaction history.

The Product 

Xapo has a beautifully designed website with intuitive navigation and integrated, step by step directions for all the Xapo features offered.  Debit card management, vault and hot wallet access, and all accounting features are available on both desktop and excellent iOS and Android mobile solutions.

The Xapo Debit Card

The online wallet can be likened to a checking account, meant only to hold day-to-day funds. And as is custom with checking acccounts, Xapo offers debit cards issued by Visa, but these come in EUR, USD and GBP varieties. Unlike for instance e-coin, which operates like a prepaid card which must be filled with currency prior to usage, the Xapo card pulls bitcoin directly from your online hot wallet, quickly makes an exchange on bitstamp, and the merchant - or cash dispenser - pays out in fiat.

Please find below the fee schedule and limits.

Fee Description Amount
    USD EUR GBP
Odering fee Includes standard shipping $20.00 €18.00 £13.00
Annual Fee First year free $12 €10 £7
Withdraw cash ATM domestic $2.50 €2.25 £1.75
Declined transaction $1.00 €1.00 £1.00
Non-local currency transaction Currency conversion  3% 3% 3%
Point of Sale charge   0 0 0
Services Card replacement $5.50 €4.50 £4.50
Removal of unused funds $10.00 €10.00 £10.00

Xapo Debit Card Limits

The Upgrading of limits requires submission of proof of identification and address.

  Standard Limits Upgraded Limits
  USD EUR GBP USD EUR GBP
Purchase limit (per purchase) $2,500 €2,500 £ $10,000 €10,000 £8,000
Purchase limit (per day) $2,500 €2,500 £ $20,000 €20,000 £16,000
Purchase Limit (lifetime) $2,500 €2,500 £ No Limit No Limit No Limit
ATM Withdrawal (per transaction) $200 €200 £ $1,000 €1,000 £800
ATM Withdrawal (per day) $400 €400 £ $2,000 €2,000 £1,600
ATM Withdrawal (lifetime) $1,000 €1,000 £ No Limit No Limit No Limit

 

There was much customer dissatisfaction with high fees that were not properly disclosed by Xapo, but Xapo explained that this was due to miscommunication with the third-party card issuer, and there isn't much reason not to take them at their word. They were honorable in refunding monies to affected customers. Additional technical hiccups don't detract from the potential of this service.

Bitcoin account management

Xapo offers users the ability to create multiple wallet addresses, each with custom administrative permissions.  When first setting a wallet, an admin can add users and set permission levels, including their ability to make transfers from the account, designate users as transaction approvers, and set their approval threshold.  While this can be useful for a family account - as debit card-linked accounts can be allocated to children, for instance, with designated spending levels - for institutional clients it allows robust accounting and fund allocation between teams or departments, client investment accounts, savings accounts, spending accounts, etc.  A partnership with bitwage allows full payroll management directly from Xapo, with employees receiving funds into debit-card enabled accounts instantly.  

In a sign that Xapo is looking to become a one-stop bitcoin shop, wire transfers are now accepted to fund Xapo accounts. Aside from client-side bank charges and any applicable conversion fees, Xapo charges a 1% fee, and the bitcoin should appear in customer accounts within 2-5 days.

Mobile

Xapo offers the full functionality available on its desktop client through ios and android applications. Transactions are synced in real time across all user devices.  Users can send payments via email, QR code or vault address, and debit card are manageable directly from the app interface.

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Bottom Line

We could be looking at a future titan of the digital currency market.  Xapo combines insured, bank-grade savings account security with easy access and usability for spending cash.  We would like to see bitcoin's status as cost-free interlocutor between currencies leveraged for lower debit card fees.  Keep an eye on Xapo's actions in Mr. Casares' home country of Argentina, where Xapo has disruptive potential.

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Bitcoin Price (USD): 853.48