Greetings-
I was wondering: is best to store your bitcoins in a wallet that is online (a hosted wallet or an exchange)?
Or is it better to run bitcoin software yourself locally and store them in a wallet on your own PC?
I ask because I see both sides and I'm not sure the best way to proceed.
In the former situation, your coins are "in the cloud" so they are less likely to be lost or deleted. Also, you have access to them from nearly any computer. Problem is, if said site is down for whatever reason (or worse, gets hacked!) you might lose your coins anyway.
In the later situation, you maintain control of the coins. It's more secure and with good protection for your computer and a backed-up, encrypted wallet, it would be difficult to lose access to your coins. The problem then is having to run a local bitcoin client and maintain the PC, plus have lots of copies of the wallet and such in case the worst were to happen. Plus, it's harder to access the coins from a remote location.
This newbie would love to hear your thoughts... thanks!
The Extreme
There isnt a "best" answer it all depends what you want to use your bitcoins for, and how much convenience you are personally willing to sacrifice for greater security.
How many bitcoins do you have and what do you plan to do with them?