a) That's true but I don't think it matters here. Coinbase is small fry. Heck, all of Bitcoin is small fry. There may be theoretical cases where that insurance is impractical because of this, but there should be no problem finding an insurer that can fully insure Coinbase. For example, I'd wager that Coinbase's total assets are less than the cost of a new A380, and airlines have no trouble insuring their airplanes.
b) Why is it unreasonable to want insurance for offline coins? They're safer but they're hardly going to be invulnerable. Collusion, theft, or accidental loss can still happen. I'm not trying to find ways to criticize them (I have pretty much no opinion about them aside from what I've seen here, and a single Bitcoin transaction I tried with them once that went completely smoothly), I just find it weird that a financial company would go to such lengths to point out that they're insured, but only insure 2% of their total assets, to the point where it sounds dishonest to me.
a) yeah, but if coinbase and bitcoin are successful, that won't be true for long. I'm sure those guys are hoping Wall Street money will start coming in. If the bitcoin price spikes again, they may then have to stop being insured, which is worse than just not having it. Still, fair point.
b) Why unreasonable? Because only a really foolish person would keep a humongous amount of value stored on an exchange. There just isn't any reason to use an exchange like a bank exept laziness. The only exception here would be market makers and maybe big-time day traders who actually have a reason to keep a ton of money on the exchange at all times. Of course, those are the most valued partners/customers for an exchange. I would think it would make sense for Coinbase to make deals with such people to give them "priority" in case of any solvency problems, or to ensure them somehow on an individual basis, but I don't know for certain that that is legally viable.
So in my point (b), in some ways, I'm vindicating what you are saying. But still, for the vast majority of people in bitcoin-land, there is no reason to have more value stored in Coinbase than what you need to do whatever you are doing.
For example, for me personally, if I transfer $10k to Coinbase, I'm not paranoid enough to be worried about their offline coins being insured. And I wouldn't transfer a large enough amount of money to really impact me financially regardless. At least, not all at once; if I really wanted to do that, I would do it in stages.
The fact is, consumers behave in foolish ways, and it's up to Coinbase to protect them. Yet their default protections don't. In fact, Coinbase advertises the opposite: their advertising about "insurance" gives a false sense of security.
You're smart. That's good. I wasn't, and I suffered for it.
There just isn't any reason to use an exchange like a bank exept laziness. The only exception here would be market makers and maybe big-time day traders who actually have a reason to keep a ton of money on the exchange at all times.
Not even big-time day traders. I was a day trader, and the reason to keep money on the exchange was because it took a long time for a deposit to be recognized by the system. Longer than the market opportunities existed. As far as I know, this is true for almost all exchanges due to bitcoin requiring several minutes to confirm transfers. That's why people keep a large amount on exchanges.
b) Why is it unreasonable to want insurance for offline coins? They're safer but they're hardly going to be invulnerable. Collusion, theft, or accidental loss can still happen. I'm not trying to find ways to criticize them (I have pretty much no opinion about them aside from what I've seen here, and a single Bitcoin transaction I tried with them once that went completely smoothly), I just find it weird that a financial company would go to such lengths to point out that they're insured, but only insure 2% of their total assets, to the point where it sounds dishonest to me.