In Greek, the language of the New Testament, the word Christos (Christ) begins with the letter "X," or chi. Here's what it looks like: Χριστός
In the early fourth century, Constantine the Great, Roman Emperor from 306-337, popularized this shorthand for Christ. According to legend, on the eve of his great battle against Maxentius, Constantine had a vision that led him to create a military banner emblazoned with the first two letters of Christ on it: chi and rho.
These two letters, then, became a sort of shorthand for Jesus Christ.
Most scholars agree that the first appearance of this abbreviation for Christmas dates to 1021, "when an Anglo-Saxon scribe saved himself space by writing XPmas," reported First Things. Parchment paper was quite expensive, so any techniques for saving space were welcome. The abbreviation stuck and eventually was shortened to Xmas.
Source: vox.com
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