Imagine a wallet (hot or not) becomes the market leader and more than half the existing bitcoins are stored there.
Then imagine it's security is breached.
If this happens at a time when bitcoin has been mass accepted and it is a dominant currency to store wealth in world-wide - then a criminal could be in possession of half the wealth in the world.....
Sounds surreal and could not happen in a FIAT system.
I must have missed the previous 'huge problem' that made this 'another huge problem'. Care to elucidate?
The scenario you described is one that will only be approached slowly. On the ramp up, security will also be ramped up. Gox taught us that, even tho it shouldn't even have needed to be learnt.
So I imagine such a centralized wallet solution would have multisig security on it at least. 2FA etc. Probably insurance as well.
So ... no problem. FUD again.
Where are all you guys coming from?