It's insanely different from having your money in banks. A bank is backed by the government. If a bank goes under, you still get your money. If Coinbase goes under, you get nothing or very little.
Funds from Coinbase should be evacuated to your own secure cold storage wallet immediately after you purchase them. You should never hold a balance higher than 0BTC for any length of time on Coinbase. Follow this advice and you'll have your money forever. Don't follow it and you'll lose your money the moment Coinbase suffers any serious theft, a technical disaster, a rogue employee, or the founder steals coins.
(I speak from experience, having lost a massive amount of money when Mt. Gox went under for one of the above reasons, which I probably won't get back.)
That's not true. If I had kept my funds in a secure cold storage wallet, I'd still have them.
There are plenty of techniques for keeping your coins safe. Just find one and use it. I've heard Armory is pretty good.
Coinbase is far more dangerous in comparison, because they can go under at any time for any reason. Human greed is a thing. Always remember that Coinbase has to rely on some employees to implement their systems, and those same employees can write some code to steal money from their systems.
Sorry, you're right, I didn't provide enough detail.
If the average user can figure out how to use bitcoin, then they can figure out how to use Armory. Most people have an old laptop or computer that they can afford to keep disconnected from the internet. If it's not connected to the internet, then it's not susceptible to hacks. It also offers a way of doing secure backups, so that if your computer is lost in a house fire, you'll still have your coins.
Even if they don't have an old computer, spending $100 on one off of Ebay or whatever is possibly the best insurance payment they could make, because it's just a matter of time until any bitcoin exchange dies. Not only do you have yourself to worry about, but if you have children then you'll want them to inherit your wealth. Hard to do if your wealth vanishes because your preferred exchange went under.
> If the average user can figure out how to use bitcoin, then they can figure out how to use Armory.
I don't agree. Using coinbase is vastly easier than setting up Armory and managing your own security on your own PC.
> Most people have an old laptop or computer that they can afford to keep disconnected from the internet.
They won't understand they need to; they can't even stop opening exe attachments in their email and running them, you seriously overestimate the average user.
> If it's not connected to the internet, then it's not susceptible to hacks.
Way over their head.
> It also offers a way of doing secure backups, so that if your computer is lost in a house fire, you'll still have your coins.
Doesn't matter, you lost them at the word "install".
Tell that to users of Mt. Gox or the many smaller sites that have lost bitcoins to hacks.
Coinbase is probably better secured than that, but I wouldn't trust any Bitcoin bank at this point. Personal computers are bad too because of malware, but I'd say the average consumer would be considerably safer with a safe.
