For those who might be a bit confused......<p>This feature will not make your coins more secure or prevent coinbase from being hacked. However your coins will most likely be moved to "Cold storage" which will make your coins extremely difficult to steal in the event that either coinbase or your account is breached.<p>As far as cryptocurrency exchanges go, Coinbase is among the most secure, practicing what they call "Paranoid Security".<p>Brian has written about it in the past.
<a href="https://engineering.coinbase.com/how-coinbase-builds-secure-infrastructure-to-store-bitcoin-in-the-cloud-30a6504e40ba" rel="nofollow">https://engineering.coinbase.com/how-coinbase-builds-secure-...</a>
Wow, at first I was impressed because I have used Coinbase's multi-sig BTC vaults in the past and those were the real deal. As in, they allowed for security and convenience. One key with Coinbase, one key with user, and the third key in your bank vault or somewhere hard to reach. All generated client-side. It protected against Coinbase being hacked, but still offered convenience.<p>This product is the opposite! One-key. Same security (in terms of Coinbase being hacked) and less convenience than the regular wallet! In fact they even took the multi-sig BTC wallet away. You used to be able to create more than one multi-sig BTC wallet in your Coinbase account. Now I only have one and I don't see an option to create another.<p>Maybe in practice, the risk of people getting phished is much higher than the risk of Coinbase getting hacked.
So this almost made me register for a Coinbase account to finally buy some Bitcoins. That is until I got to the ID verification section. Am I wrong to be worried about uploading a picture of my passport to a US company?
Just to warn folks, if they for whatever reason do something that makes want to get your money out, like not supporting a fork, the withdrawal delay on vaults can hinder your ability to get your funds out in time. Make sure if you do this that you stay on top of any future time-sensitive announcements they make so you can withdraw in time.
Well until CoinBase is hacked and there is nothing left FOR you to withdraw.<p>Just as with fiat USD, depositing it into any third party that is not FDIC is silly. Same here, however there is no FDIC like entity to return your money, so the only true secure way is to only hold them yourself.<p>Of course that makes mass adoption much more difficult...<p>Until Gov. Treasuries and central banks really jump into the game...