A bitcoin wallet is similar to your online bank account. It does not hold your money in reality but allows you to transact btc to usd and vice versa transactions without any hassle.
It is a good idea to have a hybrid approach while using bitcoin wallets. It means you should have a large amount of bitcoin that you want to hold for the long term in offline mode i.e. cold storage. And the one that you want to use for transacting should be kept in mobile accounts.
Based on your strategy and the bitcoin price chart offered by the wallet, you can choose the wallet type. Here we explain about paper wallets and cloud wallets.
- Cloud wallets: they are online wallets and here the keys are on the cloud on a distant server that is controlled by a third party. They have a user-friendly easy interface, but the main issue is that your private keys are with a third party. So there are high chances of theft or hacking. Cloud wallets such as Blockchain, LumiWallet, and Coinbase are quite popular. There are native wallets of different cryptocurrencies too. Some cloud wallets offer the feature of offline storage too.
- Paper wallets: these are the most simple wallets. They are paper pieces that contain the public and private keys for the bitcoin address. It is ideal if you want to store your bitcoins for a long time. But you should keep the paper safe away from water and fire and make sure that you do not lose it. There are services such as WalletGenerator that allows you to create another address and print it again on the printer.
Whichever option you choose, it is important to keep a safe backup of your bitcoin wallet keys, so that you do not lose your money.