[verygoodname]

> "why would I use a currency that easily stolen of I could just use dollars?"

If you hand out your currency to a third party (Joe Binance or someone else), then it can "easily be stolen", regardless of what currency your are talking about: using dollars instead of BTC changes nothing here.

[shadowgovt]

In the US at least, if a bank steals my dollars, the government in control of the fiat currency makes it their business to prosecute the thief and retrieve the currency, but while that is happening they make me whole by issuing me replacement money via the FDIC insurance system.

No such back-stop exists for a third party stealing your bitcoins.

[verygoodname]

And if a bank steals any other assets you may have in their custody (e.g. stocks, forex, bitcoin, etc.) does it work any differently than if they steal USD currency? Isn't there some sort of insurance or legislation that protects you in such cases? Or, if your US bank decides to steal your EUR, you have no recourse and just have to take it?

In this case, we are not talking about a bank, but about an exchange which exists outside of US jurisdiction. In this case, it does not matter if you handed USD or BTC to this third-party (outside US jurisdiction): if they decide to take your stuff, there is little actual recourse you have and FDIC won't cover it.

On the other hand, if you are dealing with an exchange within US jurisdiction (e.g. Coinbase), I don't see how BTC theft would be treated any differently from USD theft: if they take your assets, they can be brought to a court to have that fixed and return your assets (be it USD or BTC or whatever).

TL;DR: What matters is if you keep your assets (USD or BTC) with an appropriately-regulated institution (e.g. a bank within a jurisdiction you trust) or not (e.g. in an unregulated exchange outside your jurisdiction), and not so much the type of assets you have (or that were stolen/taken from you).