Topic: What is the main appeal of online wallets and why do people use them? - page 2. (Read 1030 times)

Bitcoin main function is a digital currency, and using online wallet make that way easier and convinient. Sometimes people don't bother to use offline wallet because they only have a few bitcoin and online wallet is enough. It's different when people use it as investment, they need more security so they don't use offline wallet.

But the reason people like the online wallets IS ease of use. It's easier to buy bitcoin through an online wallet, it's easy to facilitate day-to-day transactions. It's perfectly suited for business accounts - they can run transactions through an online wallet and keep their real holdings offline where they can own their private keys.

Iranus has the right angle on the risk. In the terms of US Financial history, online bitcoin wallets are currently similar to US banks in the early 1900s (before the market crash in 1929). Banks back then weren't ensured and could easily go bankrupt if not managed well, which would lead to people losing their savings. Once the market crash occurred the US government decided to ensure bank deposits to prevent "runs on the banks" by account holders. This insurance is managed by the Federal Deposit Insurance Corporations (FDIC) and protects account holders between $100,000 - $500,000 of deposits if the bank were to go out of business...i.e., "get Goxxed".

Obviously this security doesn't exist in Bitcoin (nor should it) so there is more risk each online wallet holder is taking on when they work with an online wallet company.

Two additional points.

First, Freebitco.in faucet is now adding online wallet features AND paying 4% interest on deposits, which starts to pay account holders for the risk they're taking by leaving deposits in this online wallet. Coinbase, Circle, etc., should do the same.

Second, the success of bitcoin has ALWAYS required a great amount of trust among the users in the community. That trust has been broken a few times and we've all learned from it. But if we refuse to grant trust to companies like online wallets we will forever stunt the growth of bitcoin.

Always manage your money wisely and "let the buyer beware"!

Using online wallet is much more easy to use rather than the offline wallets. Also, in having transactions, if you are to send bitcoin at any amount to another person that is using the same online wallet like yours, the transaction will be done in just a blink of an eye. No confirmation was made. That is in the case of the wallet I am using, the Coins.ph wallet. It's pretty convenient for me. Well it is a local wallet here in the Philippines. As for the aspect of security, for know I do not have any idea since I am not yet looking into it.

You're very, very wrong.

Think of a bank for a second.  When you put money in the bank, you don't own it, the bank does and they spend it for you.  The reason that your money is usually OK in a bank is because governments tend to insure reasonable amounts of money in the bank so that you can be compensated if they fail to pay and they're also very heavily regulated.

Now imagine that you were putting money into a bank that has only existed for about five years, is dealing with a new type of money, isn't insured and is extremely poorly regulated.  That's what an online wallet does.  It's about the furthest thing from safe that could exist in your lifetime.  It's basically like an exchange where you don't have to withdraw fiat.  They could collapse just like Mt Gox did and your money would be gone.

When you hold your money outside of an online wallet, you have responsibility for your funds because you actually control them.  If you lose them, that's your own fault, so it has the potential to be extremely secure.  You could run a full node; you could own a hardware wallet; you could write down the keys as a paper wallet if you don't intend to spend very often; you could even just store it in a lightweight node like Electrum.

Bitcoin offers real freedom from banks.  The whole point is that you don't have to trust a third party to have full control over your funds.  When you put your money in an online wallet, you remove that function of Bitcoin and thus it makes very little sense for you to be involved in Bitcoin at all.

All right, it's correct now People also use web wallet because, well... they have good marketing, appear on ads and newbies start in the cruptocurrency world by using them...

Oops, typo in main post, edited.

I think the main appeal of online wallets to other people is that it is very convenient to use as long as you have access to internet. You don't need to use any hardware to access your coins. But the problem with this is that it is not secured. You don't have the main control over your coins in an online wallet. Meaning if they suddenly shutdown (this is possible but the chance of this happening is very small), you will not be able to retrieve your coins from them.

The main appeal is ease of use. And no, they're not more secure, in fact it's the exact opposite...

To me, it seems like offline wallets are way more secure.