coinbase uses cold storage. (They aren't going to get hacked)
Speaking of such things, go to coinbase and talk to them. They have a support person there 24/7 to answer all these question. The charge quite a bit in fees but they handle all of the 'cold storage' for you .
I have spoken with their chat and was going to say the same thing. First thing that came to mind when I read the posts about paper wallet/cold storage is how can bitcoin succeed if a company like Coinbase can not be trusted. Then secondly I am pretty savy tech and spend a lot of time on my pc, but with the little research I have about zero clue how or why I would want to set up a cold storage/paper wallet. For 1 it seems like a hassle and 2 at this point I am a little more concerned with me losing the coins than coinbase. Then finally if someone like me doesn't want to deal with it or fully understand it how can bitcoin be widespread if everyone has go through with the multiple back ups and doing this and that What about the people who no zero or are not tech savy at all?
Shit I can't even find my thumb drive with my bootleg copy of Office 2010 (guess I should have backed it up onto 5 different drives and put them in different places with special maps to remember the locations)
In theory you are right, the industry will need to evolve to the point where there are reliable bitcoin banks. However, things are still very immature as far as security, best practices, protocols, etc. also coinbase is tiny compared to large banks, not insured necessarily.
And yes, your coins may be safer with them than yourself if you don't know what you're doing. The die hards will prefer to secure their own coins. As far as trusted third parties, coinbase seems good...just be clear that you are in fact trusting your money to a third party....maybe meanwhile you can wade into the waters of learning bitcoin self storage.
