The core idea behind Xapo isn’t their wallet software, but rather their “Vault.” While the concept of offline storage is nothing new, Xapo takes their cold storage philosophy a bit further than some.
After you make a deposit into your Vault account, we put the deposit in a computer that never has and never will have internet access. We then encrypt all the data, segregate into different chunks, and copy it onto external drives and paper. We securely store those backups in physical vaults in geographically dispersed locations.
In exchange for this protection, Xapo charges an annual fee of 0.12% for each deposit. At current rates, this would be about $0.75 per bitcoin. Xapo also claims that its vaults and deposits are fully insured by Meridian Insurance.
Based on this and other plans presented to investors, Xapo was able to see huge investments from Benchmark, Fortress Investment Group and Ribbit Capital. The investment is the second largest public funding round in bitcoin history, falling only $5 million shy of the $25 million raised by Coinbase.