Very good points, I think this is a fear on most investors minds when discussing Cryptos.
The chance of a hack causing total loss with no insurance, eventually will become a thing of the past. As the industry moves forwards I believe these types of scenarios will turn into business opportunities for blockchain enthusiasts.
At the end of your post there you mentioned for example a wallet that is insured. Paypal offers payment protection and it was a key factor in their earlier adoption in leading to a more serious followship that felt safe with Paypal. So there is a profitable model there if someone wants to code it and implement it. There is no reason we cant have fraud protection on the blockchain just it does need authority bodies which can investigate just like a bank / credit facility does.
Online money is nothing new. Digital money has been going since the telegram, is that not even more risky then BTC?
When I was a young man people used to steal cheques from the post boxes in England and forge them. Later on when tesco first went online every single credit card was stolen. The bank played catch up for weeks. There have been hacks after hacks on the current trusted long standing financial systems and no one is worried.
How did people know their money is safe in their hedge fund when Bernie Madoff done them all?? That was all using secure trusted practices was it not?
What about the 4 Barclays managers on trial currently for fraud. Or the countless MP Scandals in the UK. If this where on the blockchain atleast we'd have some form of record. some accountability. not a black box.
Fraud happens on any level it can because Thief's are ingenious. I believe cryptos would highly benefit from a consortium or regulator which was pro-active. As cryptos turn banking on its head by having deflationary currencies, the regulation should also be turned upside down. Instead of lagging, waiting for reports of issues. The regulation in crypto should be proactive. Looking for fraud, looking for hackers and continually working as community to ensure a robust and reliable experience for decades to come.