Also, is it me or are people more paranoid with their Bitcoins than others with their USDs?
The basic deal of bitcoin is that it's harder for people to tell you what you can and can't do with it, but it's also harder for them to help you if you shoot yourself in the foot with that freedom.
A lot of the peanut gallery is scared away by notions like "if you lose your key, there's no one you can yell at down a phone or sue to get your money back, so you'll just have to be an adult and plan carefully". What remains is people who are a bit more systematic and thorough with respect to their finances.
Cost. Use cases: one could transact in a medium trust environment using paper wallets passed around offline.
>What are the benefits of paper wallets over storing it online?
Limited attack surface. https://cryptoconsortium.org/standards/CCSS
The ease in duplicating a wallet beforehand (or even having a computer setup to dump it) points towards high trust for me.
If you only have bitcoin on a single hardware wallet, then if that hardware wallet fails to work one day, then you're boned. Paper wallets are easy to maintain and visually verify the integrity of (they're just ink on paper). Definitely recommend people using them keep multiple copies in different locations though.
By online:
* if you meant in a computer connected to the internet, then if your computer gets malware then it could steal your bitcoin.
* if you meant in an online exchange, then you have the above issue (malware could steal your login info) combined with the issue that the exchange could go offline / lose your money / run away with your money. (See MtGox, btc-e, etc.)
>Also, is it me or are people more paranoid with their Bitcoins than others with their USDs?
If money is stolen from your bank account, then the bank will reverse the transaction. Bitcoin transactions can't be reversed like that, so their security is solely in the user's hands.
>If you only have bitcoin on a single hardware wallet, then if that hardware wallet fails to work one day, then you're boned.
By "only have bitcoin on a single hardware wallet", I meant the case that the user did not back up their seed phrase (such as to a piece of paper). I was trying to hint that the best setup would be multiple paper wallet backups (or the seed phrase written onto multiple papers; I'm not sure it's useful to call that something other than a paper wallet) combined with a hardware wallet for actually making transactions.
you can use a multisig scheme where you have multiple private keys, but you only need a fraction of it to access your bitcoins.
costs $$$, whereas paper wallets are nearly free
>online
doesn't protect you if your computer is compromised