Anybody knowledgeable enough to invest in multiple cryptocurrencies is smart enough to know they need complete control over the primary keys. Otherwise, your investment could vanish at any moment.
I leave my fiat money in banks because I judge that the risk of the bank disappearing and taking my money with it is lower than the risk of my house getting burgled, catching fire, etc. Likewise, it's entirely reasonable to think that a competent Bitcoin broker is more secure and safe than my half-assed attempt to keep my own keys and risk losing access to my coins through my own incompetence.
That's the entire problem. Bitcoin has existed for eight years, and for a long time virtually nobody knew about it. Not a single bitcoin broker could demonstrate competency yet. It's better to stay out of this market if you think you can trust them.
I can now tell you don't own and know nothing about Bitcoin. This discussion is pointless and has now ended.
Done correctly you are absolutely better off with your btc stored at home
I am not talking about if it is a good idea to hold paper gold or btc, just if people would by paper btc.
Granted, risk is higher with cryptocurrency given its infancy; I won't dispute that. But if we trust brick & mortar banks to have adequate security policies and practices to deal with fiat currency, then the amount of trust we need to place in a competent exchange isn't multiple orders of magnitude higher than that. Just as there are security policies to mitigate risk in the world of cash, so are there policies to mitigate risk in the cryptocurrency world.
Maybe the risk with an exchange is one order of magnitude higher at the moment vs fiat; that seems like a reasonable amount. But 2-3+? No, particularly given the risks already present for fiat currency. And while we're at it, consider hardware failure risk if you're storing your own wallet files. What's an average failure rate for a storage device per year? 1-3%? Great, I'm sure you have backups. Not every user can be bothered, but any competent exchange will. Or - on the crypto side - what amount of value would be at risk due to an event like a hard fork? That's a risk at the currency level, not at the wallet/key level.
The overwhelming majority of businesses don't live or die based on the opinions of the paranoid; they succeed or fail based on the opinions of the average customer.
Neither does Polychain Capital, the cryptoasset hedge fund backed by Andreesen Horowitz and Union Square Ventures.
Polychain Capital is a hedge fund that only accepts investments greater than $500k from investors wealthy enough to manage the risk. If op had something like this in mind, he wouldn't be gauging the interest of random people on HN. Still, I believe they're too tempting a target and it's only a matter of time before their holdings are stolen.
[0]:https://support.coinbase.com/customer/portal/articles/166237...