Don’t really have a good understanding on all this stuff as far as the actual mechanics behind it. But something just really doesn’t make sense to me and it seems very amiss.

Let’s take Coinbase as an example. If coinbase is only a hosted exchange and doesn’t actually have the keys available, as they are held in cold storage, then what good are those keys to begin with if they are not required to convert to cash?

If someone was to hack into my computer and take control of my account and transfer my coins out, they don’t have the actual keys, they just have the coins that are keyless, yet they can trade those coins without the keys and cash them in.

So what the heck good are keys if I don’t need them to convert to cash? They seem to be totally useless if somebody can just steal your keyless coins, put them in another account and then convert them to cash without even NEEDING the keys. That seems like a major flaw to me??