Most people who read HN probably would never keep more than a thousand bucks or so in cash. Once you get a bunch of it, cash starts to feel "unsafe" and you deposit it at the bank, whereupon it becomes an obligation, a sort of "virtual currency" if you will. This "virtual currency" has various ways of being transmitted, and each way is at least somewhat reversible.

What about Bitcoin? If I have a bunch of it, can I convert it to an obligation with a reputable counterparty? One who will not store it in a form which makes it so easy to get away with, once stolen?

We can treat it like cash, but then we must wonder what we are doing piling up cash in our exchanges. Conventional exchanges do not work like this at all--there might be a good reason for that.