In fairness, Coinbase has

1) A multi-sig product, meaning you can store money using their product purely as a software layer. You control the private keys and you have full autonomy. If they disappear or go bankrupt your money is still as safe as you kept it.

2) USD wallets are kept in an FDIC insured bank account. As a money transmitter without the proper licenses they're not allowed to invest custodial funds or use them to finance business operations.

3) They're pretty reputable. Fred Ersham is one of their principle agents and on their board, just like Chris Dixon. They've got a great legal team, guys from big startups like Facebook or AirBnb as well as big finance firms like Goldman Sachs and Visa. They've received $106m in funding at close to half a billion in valuation and partner with Paypal and process payments for fortune 100 companies worth tens of billions of dollars, their investors include top VC firms, the New York Stock Exchange, a megabank and one of Japan's largest telecom companies. they're registered with Fincen and have licenses in 15+ states. That may not protect them from tech failures, but these aren't the type of people who operate an anonymous company that's super shady and will disappear and leave you with no recourse.

4) They store the vast majority of funds in cold storage. I can't argue how safe this is as not much is disclosed. But I do know that cold storage is pretty easy to set up and that their basic descriptions include a lot of redundancy and distributed trust. The gist of it is that keys never hit any network (not hackable) and are stored physically, encrypted, in locked vaults in the same banks we've trusted with storage of value, and require multiple people in different geographical locations to unlock funds. No system is perfect but this is a very secure system. 97% of funds are stored in this way, you can read a bit about it here:

https://www.coinbase.com/security

5) Their bitcoin funds are insured. The insurance includes cyber security, accidental loss and employees going rogue. Insurance is through Aon ($11b revenue in insurance premiums) and they claim only to use A+ underwriters according to S&P ratings.

Again, they're not perfect and there are certainly issues I can point out and more details I'd want to receive more information on. But if I could make a bet on (or an investment into) Coinbase I'd be very comfortable making it.

I do share the sentiment that many exchanges and bitcoin services just aren't anywhere close to bank-grade security. That's just a function of a new and nascent ecosystem. It happens in every industry and it takes a long time to get up to speed. The problem is that bitcoin is extremely sensitive because it's about carte-blance value tokens essentially, it's an extremely sensitive industry for this reason, so there's not much room for amateur-hour. But I think Coinbase, and the likes of say Xapo or Circle, and potentially Gemini, show that we're seeing an entirely different class of entrepreneurs from the likes of say last year's Mt. Gox, already.

Completely holding judgement on Gemini. I know the twins are going to strive for complete regulatory compliance, and that they're already rich and want to build a solid long-term reputable business, not a get-rich-quick scheme, and that they've got the funds to hire the right people and besides financial capital have some human capital in the VC/Tech space in their networks. So there's certainly the potential for this to work out, but we'll have to see.