In addition to the semi-automatic Bitcoin<->PayPal exchange service I'm working on right now, I guess we'll also need a Bitcoin web UI to make the product a breakthrough hit. For many people it's too difficult or bothersome to install and run a node on their own computer, or maybe some don't even have a computer of their own.

A web UI also makes it easier to use your coins from any location with an Internet connection. The need to make backups all the time decreases, as the server does it automatically. Of course you can also download backups of the coins onto your own computer.

The service would have the advantages and disadvantages of centralization: easier access and no need to maintain the program on your own machine, but on the other hand it makes the system more vulnerable. A server storing a lot of money becomes an attractive target for hackers, so banking grade security would be required. A central server is also easier to be shut down for political reasons, so maybe backups should be maintained in different countries.

Some ideas:
- The coins stored on the server would be encrypted with the username and password, so if someone gets the disks, he can't read the coins easily. When setting your password, there should be a widget that shows the password strength.

- For additional security you could order a list of 100 one-use keys snail mailed to your home. Each time you log in, one of these would be required, so all your money can't be stolen by just intercepting the username and password. This technique is used by some banks here.