Similar to banks, exchanges (Bitrex, Poloniex) and some online trading platforms (Coinbase) store digital currency for you and provide accounts and balances. However, there are several key differences between banks and online currency storages.
Currency storages, unlike banks, don’t insure your investments or guarantee a full refund if something happens. There have been several large breaches that led to massive losses of funds— $70 million lost or $32 million from Parity.
The easiest way to prevent losing money is to “withdraw” your digital assets and transfer them to a controlled location, such asa digital currency wallet. By allowing you to keep a digital representation of coins and tokens (“keys”) to yourself, wallets give you full security and control over your portfolio.