iLOK License storage location (safer?) USB vs. PC?

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I'm a bit confused here. Currently, due to my ethos to "do whatever is easiest to keep Pro Tools running", my licenses are cloud based. Seems like a big problem if you lose your internet connection in the middle of a session.
If I put them on an ilok dongle, does that have to be a proprietary USB? Whichever the case, can I duplicate said USB as a backup?
From my understanding, licenses can only be on 1 of 3 alternatives - my mac, USB, or cloud, correct?
Why the f'ck is that?
Tenor/Soprano Sax player/Electronic Musician. Pro Tools, Reason, 27" 4.2 ghz iMac 48g ram, Apollo x8, Mackie HR824's.
https://www.youtube.com/user/hmac66
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