It all comes down to trust. If you don't own the private keys attached to your coins, you don't actually own the coins. I use Coinbase for buying and selling, but store them on my machine at home with my backed up offsite or in cold storage.
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Yes and that is the traditional way of doing it. I just found that hi-lighted part weird. It says it is from December but I was not sure if that was new or Just an update on that day.