Bitcoin wallets based on custodianship of keys
When you entrust your bitcoins to be held by some agency/exchange on your behalf, it means you are trusting them and storing your bitcoins with them on their servers, thereby giving them custody of your bitcoins.
When you entrust your bitcoins to nobody and take responsibility for your own funds by saving your Bitcoin private keys yourself, such wallets are called non-custodial wallets.
It is a tricky question.
The type of wallet you should use really depends on your level of activity and level of security with which you want to handle your bitcoins.
It also depends on how frequently you use your funds and how much you want to store on any particular wallet. Also, are the bitcoins you possess for your savings/investment or are they for daily transactions?
I personally prefer hardware wallets like Ledger Nano X for storing a significant amount of bitcoins because of the high-security features. And I use desktop wallets to keep bitcoins which I am not using for daily transactions. So that whenever required, I can quickly connect my desktop wallet to the Bitcoin network and transfer bitcoins.
I only use web wallets or mobile wallets to keep small amounts of bitcoins, similar to a wallet in my pocket for daily transactions.
Which wallets do you prefer to use? Have you used any on this list? Let us know in the comments below!
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If you want to learn about paper wallets, check out this article.
I hope this detailed article on the different types of Bitcoin wallets including software, hardware, and desktop wallets will help you in making the right choice for yourself.