Understanding Bitcoin Addresses
A Bitcoin address serves as a unique identifier for sending and receiving Bitcoin. Similar to a bank account number, it consists of 26–35 alphanumeric characters, typically starting with 1, 3, or bc1. This guide explores the differences between Legacy, P2SH, and SegWit (Bech32) addresses, their use cases, and compatibility.
Types of Bitcoin Addresses
1. Legacy Addresses (P2PKH)
Format: Starts with 1
Example: 1BUrDeWstWetqBFn5Au8m4JFg2xJaKVN4
Legacy addresses use Pay To Public Key Hash (P2PKH) and are the original Bitcoin address format.
- Pros: Universally supported.
- Cons: Higher transaction fees, case-sensitive, and less efficient for modern use.
👉 Learn how to optimize Bitcoin transactions
2. P2SH Addresses (Pay to Script Hash)
Format: Starts with 3
Example: 3H28N5WuREZ93CNmhWcRcrnykWrMqkhFyWN
Introduced in 2012, P2SH supports multi-signature wallets and reduces sender fees.
Features:
- Enables complex scripts (e.g., multi-signature).
- Compatible with SegWit via wrapped formats (P2WPKH-in-P2SH).
3. SegWit Addresses (Bech32)
Format: Starts with bc1
Example: bc1uf5tdn87k2uz7r2kl5zrfww362ch3746lq5vse7
SegWit (Bech32) addresses offer:
- Lower fees: Smaller transaction sizes.
- Enhanced security: Built-in error correction.
- Limitations: Not all wallets/exchanges support Bech32.
👉 Explore SegWit-compatible wallets
Key Comparisons
| Feature | Legacy (P2PKH) | P2SH | SegWit (Bech32) |
|---|---|---|---|
| Prefix | 1 | 3 | bc1 |
| Fee Efficiency | High | Medium | Low |
| Multi-Sig | No | Yes | Yes |
| Adoption | Universal | High | Growing |
FAQ Section
1. Can I send Bitcoin from a Legacy address to a SegWit address?
Yes! SegWit is backward-compatible. However, some exchanges may not support direct transfers to bc1 addresses.
2. Why are SegWit transactions cheaper?
SegWit reduces transaction size by separating witness data, lowering fees.
3. How do I identify a P2SH address?
Look for the prefix 3 (e.g., 3H28N5...).
4. Are Bech32 addresses case-sensitive?
No. Bech32 uses lowercase letters for readability.
5. Which wallets support SegWit?
Popular options include Ledger Nano S, TREZOR, and Electrum.
Best Practices for Bitcoin Addresses
- For savings: Use SegWit (Bech32) for low fees.
- For exchanges: Check compatibility before withdrawing to
bc1addresses. - For developers: Leverage P2SH for smart contracts.
By understanding these formats, you can optimize transactions and reduce costs.