In 2012, I sold crypto on a crappy little exchange website I built, that didn't even have SSL. It was a 48h-hackjob after I realized people wanted to buy certain currencies, but had no place to do so with EUR. I created a couple of posts about it on the relevant forums and I started selling. People were suspicious at the beginning, but I always delivered within 10 minutes and the orders grew bigger. About two weeks after the website had been established, the first customer bought from me for over 1000$. He had never actually met me, was from Canada and the only thing he had was a picture of my loaded wallet with a piece of paper with the name of the site next to it. He wired the money and I sent the funds. Why am I telling you this?
Greed is incredibly powerful. Would you send 1000$ to an anonymous person, with your decision based on nothing but a promise?
This week, something happened that has happened countless of times since then. An exchange turns out to be shit, casually loses a couple hundred million dollars worth of crypto, and AGAIN, hundreds, if not thousands of people whine about loosing money. But in my opinion, if you had money on BitGrail (and are now sorry that it is gone) it's your own fault and your own fault only. There is no one to blame but yourself.
The funds I use for this project are actually stored on an exchange. But the funds I used for this project are also money I consider expendable and the work to transfer every single currency to cold storage or a dedicated wallet is just not worth my time. I am fully prepared to lose all of it and if that day comes, I will shrug, say "Tja" and carry on. The funds I own and I actually care about are all stored in cold wallets and unless some fundamental flaw in a certain hash function is found, I'll be fine.
Many people have (vastly) upwards of 1000$ in crypto. A paper wallet goes for 5cts and 15 minutes of work. Or are you a day trader and need to accesss the wallet on a regular basis? Then get a hardware wallet, there are enough well established companies like Ledger and Trezor out there. A hardware wallet goes for around 100$ on average and it won't get much more comfortable, especially as many exchanges actually specifially support these devices.
Pretty much every concern people have about cold storage is easily dispelled. Afraid your apartment will burn down and you could lose access? Make a copy and store it at your parents house. Afraid your nosey flatmate might find the wallet and make copies? Encrypt the keys before storing them or just change the third letter of the private key to another value. Very easy to remember, impossible to crack.
And this is already pretty high-level stuff. The amount of people not using 2FA? Probably more then 50% of all users and rising.
Over the last weeks, I have tried to figure out if I should feel sorry for people that have lost funds, whether it be on shitcoins, scams like Bitconnect, hacks or simply negligence. And I have come to my conclusion - No. No, I don't feel sorry for anyone that has lost money since MtGox. At this point, the only reasons people are still losing money are greed, stupidity and lazyness. We laugh about our parents writing their PINs on their Iphones and debit cards but fail to recognize our own shortcomings.