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The purpose of deposit insurance is to prevent runs on banks that make loans and don't have as much money in their vaults as the total of their customers' balances. Coinbase does not make loans. As far as I can tell, it's a service that stores your actual bitcoins for you. FDIC-style insurance isn't applicable.

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Very good point. But I still think the bitcoin ecosystem is missing a foolproof way to securely store bitcoins in the way that US dollars have a bank.

Paper wallets can get lost or stolen, A lot of online wallets get hacked, and DIY encryption doesn't seem like a great way to go either, especially for grandma.

I'd happily pay a fee to coinbase in exchange for some kind of insurance against them being hacked.

Agreed. The bitcoin ecosystem will need traditional banks, credit cards, and the rest of the financial services industry. Prices that involve transfers will just be lower, and interest rates on deposits will have to factor in expected deflation once that stabilizes.

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