Bitcoin Address Types

What Is a Bitcoin Address?

A Bitcoin address is a unique string of letters and numbers used to send and receive Bitcoin (BTC) on the blockchain. Similar to an email address, it acts as a destination for transactions. Bitcoin addresses are generated from public keys and vary in format based on the type of address used.

Different address types offer varying levels of efficiency, security, and transaction fees. Understanding these differences can help you choose the best address type for your needs.

Types of Bitcoin Addresses

Bitcoin addresses come in multiple formats, each with distinct characteristics. The three main types are Legacy (P2PKH), Nested SegWit (P2SH), and Native SegWit (Bech32).

Legacy Addresses (P2PKH)

Legacy addresses, also known as Pay-to-PubKey Hash (P2PKH), are the original Bitcoin address format. They begin with the number 1 and are widely supported across all wallets and exchanges. However, they have higher transaction fees because they use more block space.

For example: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa

Nested SegWit Addresses (P2SH)

Nested SegWit, or Pay-to-Script Hash (P2SH), is an improvement over Legacy addresses. These addresses begin with 3 and allow for complex scripts, such as multi-signature transactions. They offer reduced transaction fees compared to P2PKH but may not be supported by all wallets.

For example: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

Native SegWit Addresses (Bech32)

Native SegWit, or Bech32 addresses, provide even lower transaction fees and improved efficiency. They begin with bc1 and use a more human-readable format. Bech32 addresses reduce errors in copying and are fully compatible with the SegWit protocol. However, some older platforms may not support them.

For example: bc1qw508d6qejxtdg4y5r3zarvaryv7z6h78j8x3t4

Which Bitcoin Address Type Is Best?

Using SegWit-based addresses (P2SH or Bech32) can lead to lower transaction fees and faster confirmation times. They also enable innovations such as Taproot, which improves privacy and efficiency. If you are still using a Legacy address, consider switching to a modern format to optimize your transactions.

As Bitcoin continues to evolve, new address formats and improvements will enhance security, scalability, and usability. The adoption of Taproot addresses (P2TR) is the next step in Bitcoin’s development, providing enhanced privacy and smart contract capabilities.

FAQ

Can I send Bitcoin to any address type? Most modern wallets support all address types, but some older platforms may not recognize Bech32 or Taproot addresses. Always verify before sending BTC.

Which Bitcoin address type is best? Bech32 (bc1) addresses are the most efficient and cost-effective, but if compatibility is a concern, P2SH (3) addresses provide a good balance.

Can I convert my Legacy address to SegWit? You cannot directly convert an old address, but you can generate a new SegWit address in a compatible wallet and transfer your funds.

Why do some Bitcoin addresses start with bc1, 1, or 3? These prefixes indicate different address formats: Legacy (1), Nested SegWit (3), and Native SegWit (bc1).

Are Taproot addresses widely used? Taproot (P2TR) adoption is growing but is not yet as common as SegWit. Over time, more wallets and exchanges will support it.