Address formats used in the bitcoin network include Legacy (P2PKH), Script (P2SH), SegWit (P2WPKH) and Taproot (P2TR).The technology used and user benefits, such as the ability to pay lower transaction fees, vary depending on the form of bitcoin address.
SegWit is the most common bitcoin address standard as of May 2023.
The last format address that existed in the first cryptocurrency protocol was the Taproot format address, or Bech32m. It was launched at the same time as the November 2021 update activation.
How do I determine the type of Bitcoin address?
Bitcoin addresses come in different types. They are clearly distinguished by a prefix, which is a set of characters at the beginning of the address:
- Legacy(P2PKH): the first character is 1, for example, 1N4Qbzg6LSXUXyXu2MuDuGfzxwMA7do8AyL.
- Font (P2SH): begins with the number 3. Illustration – 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.
- SegWit (P2WPKH): “bc1q” first characters. bc1qfg9t7fwn0atn4yf9spca5502vk8dyhq8a9aqd8 is an illustration.
- Taproot (P2TR): begins with the similar characters “bc1p”. bc1peu5hzzyj8cnqm05le6ag7uwry0ysmtf3v4uuxv3v8hqhvsatca8ss2vuwx – illustration.
What does Legacy bitcoin address mean?
The original bitcoin address standard, called a legacy address, was proposed by Satoshi Nakamoto. It is also known as P2PKH (Pay To Public Key Hash) because the public and private keys of the recipient must be used to calculate the signature.
Address of type Legacy has three components:
- public key created after the private key was subjected to SHA256 and RIPEMD algorithms;
All bitcoin network wallets and programs allow incoming and outgoing transfers from such addresses. The biggest disadvantage of Legacy addresses is the high commissions. In addition, they have a lower rate of double hashing of the checksum and a higher weight of QR codes.
What is the difference between Legacy and Script (P2SH)?
Bitcoin Foundation chief scientist Gavin Andresen is responsible for the scripting addresses that were included in Bitcoin improvement proposal BIP-0016 in January 2012.
They are structured similarly to Legacy addresses, but start with 3. Such addresses assume that the recipient must have a script that matches the hash script in order to get the money. You can use this feature to lower the transfer price, charge the recipient a fee, and generate addresses with multiple signatures.
What are the benefits of the SegWit format?
The Bech32 address type was proposed by creators Peter Well and Greg Maxwell in the spring 2016 BIP-0173 update. It is also known as P2WPKH (Pay to Witness Public Key Hash) or Segregated Witness (SegWit).These addresses use the SegWit protocol, which reduces transaction costs even more than Script or Legacy by eliminating signatures from blocks in the Bitcoin network. At the end of August 2017, a similar update went into effect.
By 2022, all widely used bitcoin wallets will support SegWit, which is considered the industry standard. According to Transactionfee.info, in mid-August 2022, about 85% of all external transactions were from SegWit addresses.
The ideal type of bitcoin address is a taproot, isn’t it?
An update to the Taproot bitcoin protocol was expected several years ago. It was fully activated in November 2021.
The update includes important technical changes, including the introduction of the MAST idea and the Schnorr signature method. Taproot should improve the efficiency and scalability of the bitcoin blockchain. Addressing the new format, which has been named Pay-to-Taproot (P2TR) or Bech32m, is another consequence of the update.
Low cost compared to other formats and more affordable payments through the Lightning Network are key advantages of Taproot addresses for their owners.However, Taproot has a significant drawback – only a few wallets currently accept this type of address. Only 0.56% of all outgoing transfers on the Bitcoin network as of mid-August 2022 have been made from such addresses.
The decentralized bitcoin network, used by a huge number of applications and users, is used to the gradual introduction of new standards. After the introduction of SegWit, a similar problem arose.
Is it possible to send bitcoins in different forms to different addresses?
At the moment, SegWit, Legacy and Script are fully compatible with each other. In other words, you can freely send and receive money between them.
With Taproot, the situation is somewhat different. Most common non-custodial wallets allow you to send transactions to Bech32m addresses, but they lack the tools to generate those addresses. In addition, not every cryptocurrency exchange supports sending money to a Taproot address. On Bitcoin Wiki you can see the current status of Taproot implementation in known bitcoin wallets.
Many of the active bitcoin blockchain observers, such as Blockchair or Blockstream, support transactions using P2TR addresses.
What is a bitcoin address?
An individual can send and receive money using a special identification number called a bitcoin address. Each BTC address is unique and is created using sophisticated encryption methods. It functions in the bitcoin network as a counterpart to a bank account.
Which bitcoin wallet format works best?
We recommend using SegWit starting in 2022 because it is the most modern standard that reduces transaction costs for bitcoin transactions and is supported by most wallets. In the future, this format will likely replace Taproot.
How to decide which bitcoin address to use?
When creating an address, bitcoin storage software often allows you to choose the format of the address.
How many characters are in a bitcoin wallet address?
The initial address of the initial cryptocurrency consists of 34 characters, SegWit (Bech32) addresses usually consist of 42 characters, and Taproot (Bech32m) addresses consist of 62 characters.
How many bitcoin addresses are there in total?
In August 2022, the bitcoin network had more than 38 million non-zero addresses, according to Glassnode. Nearly 1 million bitcoin addresses make and receive transactions every day.