Key points
- The bitcoin network supports several address formats: Legacy (P2PKH), Script (P2SH), SegWit (P2WPKH) and Taproot (P2TR).
- Each type differs in technology and user benefits—in particular, the potential to pay lower transaction fees.
- As of August 2022, SegWit was the most popular standard for bitcoin addresses.
- The newest format in the protocol is Taproot, or Bech32m, introduced with the November 2021 upgrade.
How to tell bitcoin address formats apart?
The bitcoin network supports several types of address. You can distinguish them by the prefix—the characters at the start of the address:
- Legacy (P2PKH): starts with the digit 1. Example: 1N4Qbzg6LSXUXyXu2MDuGfzxwMA7do8AyL.
- Script (P2SH): starts with the digit 3. Example: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.
- SegWit (P2WPKH): starts with “bc1q”. Example: bc1qfg9t7fwn0atn4yf9spca5502vk8dyhq8a9aqd8.
- Taproot (P2TR): starts with “bc1p”. Example: bc1peu5hzzyj8cnqm05le6ag7uwry0ysmtf3v4uuxv3v8hqhvsatca8ss2vuwx.
What is a Legacy bitcoin address?
A Legacy address is the first address standard on the bitcoin network, proposed by Satoshi Nakamoto. It is also called P2PKH (Pay To Public Key Hash) because spending requires the recipient’s signature, computed from the private key, and a public key.
A Legacy address consists of three parts:
- a prefix;
- a public key produced by applying the SHA256 and RIPEMD algorithms to the private key;
- a checksum.
Both incoming and outgoing transfers to and from such addresses are supported by all wallets and apps that work on the bitcoin network. The chief drawback of Legacy addresses is higher fees. They also suffer from slow double-hashing of the checksum and a larger footprint in QR codes.
How do Script (P2SH) addresses differ from Legacy?
Script addresses appeared in BIP-0016 in January 2012 thanks to Gavin Andresen, chief scientist of the Bitcoin Foundation.
They share the same structure as Legacy addresses but start with the digit 3. Such addresses require that, when spending funds, the recipient provide a script that matches the script hash. This feature helps reduce fees, shifts fee costs to the recipient and enables multisignature addresses.
What are the advantages of SegWit?
In spring 2016, developers Peter Welle and Greg Maxwell proposed a new address format called Bech32 in BIP-0173. It is also known as Segregated Witness (SegWit) or P2WPKH.
These addresses use the SegWit protocol, which reduces the size of a block on the bitcoin network by removing the signature from it, making transaction fees even lower than with Script or Legacy. The upgrade was activated in late August 2017.
As of 2022, SegWit is considered the industry standard and is supported by all popular bitcoin wallets. According to Transactionfee.info, about 85% of all outgoing transactions in mid-August 2022 were made from SegWit addresses.
Is Taproot the best type of bitcoin address?
An upgrade to bitcoin’s protocol called Taproot (literally “taproot”) had been awaited for several years. Activation was completed in November 2021.
The upgrade included important technical changes, notably the implementation of Schnorr signatures and the MAST concept. Taproot should improve the efficiency and scalability of bitcoin’s blockchain. Another consequence was a new address format, called Pay-to-Taproot (P2TR) or Bech32m.
The main advantage of Taproot addresses for users is the lowest fees compared with other formats, as well as cheaper payments on the Lightning Network.
However, Taproot has a significant drawback—only a small number of wallets support it so far. In mid-August 2022, just 0.56% of all outgoing transfers on the bitcoin network were made from this type of address.
Gradual adoption of a new standard is normal for a decentralised network such as bitcoin, which is used by a vast number of apps and users. A similar pattern followed the introduction of SegWit.
Can you send bitcoin between different address formats?
Today, Legacy, Script and SegWit are fully compatible with each other. You can freely make both incoming and outgoing transfers between them.
Taproot is somewhat different. Most non-custodial wallets support sending to Bech32m addresses but do not yet let users create them. In addition, not all crypto exchanges allow withdrawals to Taproot. The current state of Taproot support in popular bitcoin wallets can be found on the Bitcoin Wiki.
P2TR transactions are supported by many bitcoin block explorers, such as Blockchair or Blockstream.
Frequently asked questions
What is a bitcoin address?
A bitcoin address is a unique identifier that lets a user send and receive cryptocurrency. Every BTC address is unique and generated by complex cryptographic mechanisms. It serves as the equivalent of a bank account on the bitcoin network.
Which bitcoin address format is best?
As of 2022 we recommend using SegWit—it is the modern standard, allows low fees on the bitcoin network and is supported by most wallets. In future this format will likely be superseded by Taproot.
How do I choose an address type?
In most cases, a wallet app lets you choose the address format when creating an address.
How many characters are in a bitcoin address?
A Legacy address for the first cryptocurrency contains 34 characters; SegWit addresses (Bech32) most often include 42 characters; Taproot (Bech32m) has 62 characters.
How many bitcoin addresses are there?
According to Glassnode, in August 2022 there were more than 38m addresses with a non-zero balance on the bitcoin network. Every day, around 1m bitcoin addresses send or receive transactions.