There are several cryptocurrency wallets out there and anyone with the programming skills can create a cryptocurrency wallet. However, it's important to use a trusted wallet that's well respected. There are three main types of wallets. **Hosted, SPV and Full. **You should choose one that best suits you. I will detail the differences below:
Full Wallets (Bitcoin.org, Electrum, Ethereum Wallet)
Full wallets are also "full nodes" for cryptocurrency networks. Full nodes listen for, validate and relay all transactions that come across the network. They help bridge gaps in connectivity and make it possible for transactions in the United States to be received by miners in China. To run a full wallet you need to download and install a program on your computer.
Benefits: When you run a full wallet you are a supporting the network by creating a full node. While there's no monetary benefit to yourself by running full node, it's altruistic act that helps ensure transactions a relayed across the network quickly and reliability. They also protect your privacy better. No one knows your private key or public key and you are in full control of your cryptocurrency.
Negatives: You need to download the full blockchain (currently over 100 GB). Its huge! This wallet isn't mobile and will have to exist on your desktop or laptop computer. Also, if you lose the password to your private key or your computer's hard drive fails and you don't have a backup you LOSE access to your cryptocurrency.
Hosted Wallets (Coinbase, Uphold, Xapo):
Hosted wallets are created and controlled by companies that control access to "your cryptocurrency" they are essentially a bank for your cryptocurrency (without the fractional reserve aspect in most cases).
Benefits: These wallets are convenient because they allow you to send cryptocurrency by email or text message and allow you to recover your account if you forget your password. They also provide a way to securely access to your cryptocurrency (in most cases you 2 factor authentication is required to access your account, something many traditional banks still haven't implemented).
Negatives: You technically are not in control of your cryptocurrency when you use a hosted wallet. If there's a security breach and a hacker or say the government shuts down the company for non compliance with KYC/AML (know your customer/anti money laundering" violations) your cryptocurrency may not be recovered. There's also zero privacy when you use a hosted wallet. In some cases an end of year tax return is generated for you!
Simple Payment Verification (SPV) Wallets (Copay, Mycelium, Blockchain.info)
Lightweight wallets reference a trusted cryptocurrency node (aka trusted Full wallet). Because they just reference the full wallet, the individual does not need to download the full wallet. As such to use a lightweight wallet is as easy as downloading a iPhone, Android app or web app in your internet browser.
Benefits: Quickly get started by typing in a web address or download an app on your mobile device. You maintain direct control over your cryptocurrency and even the wallet host cannot take your cryptocurrency.
Negatives: You need to be careful and backup your cryptocurrency keys. If you don't backup your keys and your device fails you lose access to your cryptocurrency. Backing up will typically require writing down of a 12 or 15 word phrase.
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