[mikeash]

Cash is vulnerable to actual smash-and-grab attacks, wherein physical items are properly smashed and grabbed. People still use it extensively.

The problem with bitcoin isn't necessarily that it's too much like cash, but that people don't treat it enough like they would treat cash. Few people would put their cash in a robot that would hand it over blindly to anyone with the right password, but that's effectively what they're doing by holding bitcoins on an exchange like Mt.Gox.

[PostOnce]

The key problem with the "cash is also vulnerable to smash and grab" argument is that you can be in Romania and grab someone's bitcoins in Illinois, whereas with cash, you actually have to be physically present, which is easier to notice, easier to track afterwards, easier to verify, and harder to escape from.

Also, bank vaults are guarded, you can't shoot a bot and you can't dye-pack bitcoins.

[mikeash]

Yes, there are differences, but my point is that people treat bitcoins the way they'd never treat cash. Holding bitcoins in Mt.Gox without two-factor authentication is like having a safe outside in front of your house labeled "CASH" with nothing but a combination lock on it.