Blockchain wallets come in many flavors and form. There are currently four different types of wallets; paper, hardware, pc and mobile. Regardless of the type of wallet you choose to use they are basic access points to the blockchain. No wallet holds your funds but rather allows the owner of the mnemonic seed phrase or private key to have full access to the funds held on the blockchain. Within the four types of wallets are two categories, custodial and non-custodial.
Custodial vs Non-custodial Wallets
Coinbase Exchange App(custodial)
Coinbase Wallet(non-custodial)
The two categories all wallets would fall under would be either custodial or non-custodial. Custodial wallets could be compared to you bank. You own an account with funds in your name but ultimately its their responsibility to secure your funds. The benefit of custodial wallets would be for a person who may not trust themselves to properly store their seed phrase or have the technical know how. The downside of a custodial wallet is clearly someone else owns the keys(or access), not your keys not your funds. Non-custodial wallets solve the ownership issue but may fall flat on security dependent of the user. The complete opposite of custodial wallets, non-custodial forces users to be responsible of their own seed phrase. If at any point the seed phrase is loss your funds may be forever lost on the chain until the seed phrase is recovered. It's never lost, without the seed phrase no wallet would have full access to transfer funds.
Paper and Hardware Wallets
Paper Wallet
Paper and hardware wallets are similar in their approach. Both are considered cold storage wallets, cold meaning they don't need internet connection to function. Paper wallets have become more obsolete through time because it's simply a piece of paper. On the paper would normally be a private key(derived from mnemonic seed phrase), public key(shared address), and a QR code. If you would happen to misplace your paper wallet to whoever has that paper essentially has enough information to become the owner. Cold storage wallets especially hardware wallets, LEDGER and Trezor, have gained popularity due to the fact they don't require internet connection. By limiting connection it minimizes attack vectors(weak points) for hackers and criminals.
Ledger Nano S(hardware)
Mobile and PC Wallets
Mobile and PC wallets more commonly fall under hot wallets. Hot wallets are the opposite of cold wallets, needing internet connection to function properly. The most commonly used wallets, mobile and PC wallets bring a variety risks and benefits. All hot wallets are vulnerable to hackers and criminals, same practices normally taken to secure online accounts and pc would be applied to mobile and pc wallets. Majority of the downside depends on the users being actively responsible. Although it may seem daunting, everyday when you leave your car you lock your door? Wouldn't want someone to have an easy day obtaining a new vehicle that you worked hard to get. The biggest benefit to mobile and PC wallets is pure convenience. At anytime you can open that app on your PC or phone and know you can check your funds, not only that, and if you wish you can send or buy items with your crypto.
Epilogue
No matter which type of wallet or which category you choose, all wallets serve the same purpose. They are UIs(user interfaces) to access you funds so long as you own the keys. Mnemonic phrase and seed phrase are the same thing, consisting of a 12-24 word phrase. Your seed phrase is your keys and never share them. There are many options and providers for crypto wallets, please do your due diligence.
