The situation in the market has become one where Bitcoin is trading on relatively low volume without major moves. But the currency is in a very important place. Actually, Bitcoin is simmering slowly. Will it boil? Will this increase the profits on our hypothetical positions?
The Bitcoin market has its undeniable quirks. From the wild volatility of the currency to a community of developers supporting it, to the fact that Bitcoin can be put in vaults. Putting Bitcoin in “cold vaults” usually means transferring the currency to a storage device without any access to the internet or any outside networks. But sometimes Bitcoin is put in actual vaults. In an article on Bloomberg, we read:
Behind the guards, the blast doors and down corridors of reinforced concrete, sit the encrypted computer servers — connected to nothing — that hold keys to a vast digital fortune.
Argentine entrepreneur Wences Casares has spent the past several years persuading Silicon Valley millionaires and billionaires that Bitcoin is the global currency of the future, that they need to buy some, and that he's the man to safeguard it. His startup, Xapo, has built a network of underground vaults on five continents, including one in a decommissioned Swiss military bunker.
In the rarefied world of wealth management, Xapo is known for a client list studded with family offices, and for occasionally letting a journalist peek into a stronghold to write about its security. But one secret has proven elusive: how much digital cash does it really hold?
Two Xapo clients said it houses roughly $10 billion of Bitcoin. Another person close to the venture called the figure an accurate approximation. Bitcoin's price, after all, is hardly steady.
If this seems crazy, then maybe it is. A bit. On the other hand, if you have a sizable position in Bitcoin, then cold storage and, more specifically, an actual vault might be the way to go. This is mostly important for the insurance part of your portfolio. Even if don't have access to services like Xapo, it might be a good idea to hold part of your coins in cold storage. A simplest idea would be an external USB stick or hard drive without connection to the Internet. The problem with this, of course, is that you have to keep track of where the drive is, unless you can put it in a safe location (e.g. an actual safe) and you have all the same problems you would normally have keeping large amounts of cash at home (risk of robbery, etc.) This is why other kinds of storage services might enjoy some interest in the future.
