Read: http://gavinthink.blogspot.com/2011/06/why-arent-bitcoin-wallets-encrypted.html

Yeah, but a forgotten password is everybody's own fault, while the average BTC user can't be expected to only keep his wallet on his walled-off linux machine with only carrier pigeon connectivity.
Of course, most known cases of theft have been linked to gross negligence, but that's just how people work - you don't worry until it's too late.

I, for one, would welcome wallet encryption, even if it's not 100% secure and perfect. I mean, what is 100% secure?

It really doesn't make any difference whose fault it is. If anything, having it be your fault makes it worse.

Of course not. Since they can't be expected to secure their machine, they shouldn't be holding BitCoin keys on it. The best way to use a credit card is not to become a bank or a merchant.

Propose a scheme. I don't know how to do it so that the upside exceeds the downside. If you do, please share.

It really doesn't make any difference whose fault it is. If anything, having it be your fault makes it worse.
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if you say so.... I would not think so.
I was under the impression that BitCoin is meant for everybody, not only for banks... So there should be security enough for everybody to use it, otherwise it will fail.
As long as "oh noes you could install a keylogger specifically for bitcoin, which makes no encryption better than having encryption" is an argument, I won't bother, thank you ;-)

Bitcoin is a specification and protocol. The bitcoin client that everybody is talking about is an implementation. But for the normal user, the only thing something "is" is what is in front of their face on the screen. So for new users, the bitcoin client from bitcoin.org is bitcoin. There's a great opportunity for somebody to develop a more full-featured client (with encryption, backup, payment confirmation, etc.). I bet one will emerge soon.

If someone uses your pc?

You mean you don't have your own user login with encrypted home folder on your pc then I guess?  Because you should, if you're keeping many bitcoins on it. 

If someone stole my PC then I suppose they could crack the encryption and steal my wallet but I hope this security at least would buy me enough time to get my wallet backup to another PC and move my bitcoins to a safe place.

Personally, I am only allowed access to my encrypted wallet after I prick my finger and take a small blood sample. 12 hours later, my DNA is roughly confirmed and I'm allowed to "see" in the wallet. I can't make transactions to new addresses for about 5 days while confidence in my identity is confirmed.

Also, I'm required to submit nasal and fecal swabs. A few tests are run and the unique combination and relative numbers of various bacteria, as well as their particular drug resistances and other protein markers, are used to confirm that I am probably me, and probably alive. One time, I got food poisoning and this threw everything off until my bacterial load was back to normal. I couldn't spend bitcoins for a few weeks.

After those tests are approved, I have verbal passphrase that is checked not just for correctness, but for indicators of stress in order to test if I am likely being coerced. After that, I type in a password that varies daily based on another password that was encrypted with a one-time-pad. Then, a random block of text is generated on-screen for me to type out. You might be able to fake all the prior checks, but have fun trying to replicate the exact cadence of my typing.

All throughout this, I have a hidden microphone that listens for me saying a particular keyword that indicates that I'm under duress. If I drop it into conversation with whoever might be coercing me, my wallet is locked for 1 month.

After that, I am given 3 names of random friends and relatives who I must talk to in order to be given one-time passwords taken from separate books that I gave them previously.

One person is chosen to perform a "secret handshake" that varies slightly with each day of the week.

Then, my dog has to go through most of the above steps, because he's always with me. I haven't been able to get into my wallet this month because he really sucks at typing and can't remember his verbal password until I give him a treat.

Running the client is not the only way to adopt BitCoin. Currently, it is most certainly not the best.

You haven't proposed a complete scheme, so you're comparing the advantages and disadvantages of something that exists to something that isn't even specified. For example, under 'encrypted', you assume the thief cannot brute force your password. That will mean that your password will have to be the kinds of things a human being can't memorize reliably. Yet you don't consider the risks of forgotten passwords.

Anyone who has been around computers for at least ten years has had the experience of using a system you used to use regularly one time after a year or more of not using it and having no idea what your password is. This is the #1 way people will lose their BitCoins.

Just a few months ago, I had to use a system I used to use daily for six years with the same password after having not used it for just 8 months. I had no idea what my password was and had to recover it. I must have typed that password at least 2,000 times. And this was a short/simple password, I think it consisted of a short English word and two digits that were meaningful to me -- but I don't even remember that for sure. A password that short would be useless for protecting your wallet. And there's nobody to recover your password for you with BitCoins.

Remember, if your password is only needed to transfer coins, the thief will know exactly how valuable cracking your wallet is. And he'll probably have access to a vast network of compromised machines to use to brute force your password.

If you have a scheme for wallet encryption that you think has advantages that outweigh its disadvantages, propose it.

Because I believe they create more problems than they solve in this case. If you think otherwise, propose a schemce.

It applies only to this specific case. Passwords are great "is X allowed to do Y". They are *not* great for this case. At least, not in any of the proposals I've seen.

You are more likely to lose your BitCoins through forgetting your password than you are to have them stolen by a trojan. If the passwords are made short enough that people will remember them, they will be brute forced, giving the worst of both worlds -- a false sense of security, and a risk of losing your own wallet if you can't muster enough power to brute force.

I have yet to hear your proposal. I can't evaluate a proposal I haven't heard. I can't think of one that doesn't make things worse for the average user. Maybe you can. If so, let's hear it.