Previously, we introduced different types of wallets and their main purpose of storing the private key, address and blockchain data. Depending on how the data is protected and how decentralized the wallet is, we can further categorize them as: Full node wallet, lightweight wallet and centralized wallet.
The Bitcoin Core wallet is the representation of a full node. It syncs all the data on the blockchain, taking up lots of storage space. However, it is completely decentralized. Lightweight wallet relies on other full nodes of the Bitcoin network, only syncing the data that it needs, achieving a basic level of decentralization.
A centralized wallet doesn’t depend on the Bitcoin network, all data comes from its own central server, which translates to high efficiency as transactions can be made real-time. Registering on an exchange platform provides you with a centralized wallet.