Quote from: beeblebrox on November 02, 2013, 08:05:04 AM

Ask yourself this question: "Have I ever used an exchange to buy or sell bitcoin?"-- cause if you have then it most likely involved an off-chain transaction.

That depends on how how you define the boundary of a transaction.

In my case, there is nearly a 1:1 relationship between off-chain transactions and blockchain transactions related to buying and selling Bitcoins.

For example, when I purchase via Coinbase, they first allocate some of their bitcoins reserves to me via an internal database operation, which could be considered an off chain transaction, but as soon as those bitcoins are accessible I immediately withdraw them to my own wallet.

As far as I'm concerned, I'm not performing any off chain transactions because I never consider the purchase complete until the bitcoins I have bought move on the blockchain to an address I control.

I understand that several startups have a strong financial incentive to push a different paradigm, to convince users to let them hold their bitcoins on their behalf. When they inevitably steal/lose/confiscate their user's funds I won't be affected.