Private Key Fallacy

Private keys do not secure Bitcoin, they secure units of Bitcoin. Private key control applies to individual security, not system security. Whoever controls keys is the owner, and Bitcoin provides security for that owner, even if the keys are stolen. Decentralized validation secures consensus and majority hash power secures confirmation, but private key security is the owner's problem.

System weakness results from lack of decentralized validation. Consensus risk is shared among active merchants only. The risk of delegation is that it is commonly coupled with centralization, as is typical in web wallets. The wallet not only owns the units but controls validation of received units. This reduces the distribution of risk to one person for all of the wallets under that person's control.