Know Your Bitcoin Addresses

Bitcoin addresses are alphanumeric strings used to execute transactions on the Bitcoin blockchain. There are multiple types of Bitcoin addresses, each with a distinctive format and features, corresponding to various types of Bitcoin transactions.

This guide explains the different types of Bitcoin addresses and which to use for different transactions.

Types of Bitcoin Addresses

The most frequently used Bitcoin address types are:

• Legacy or P2PKH Addresses:

Legacy addresses, or Pay-to-Public-Key-Hash (P2PKH) addresses, originally, when Bitcoin created the crypto scene, the legacy address was the only type available. Currently, it is the most expensive because it consumes the most space within transactions.

• Start with the number “1”

• The original Bitcoin address type that is compatible with all Bitcoin wallets and exchanges

• Offer a high level of compatibility, though they do take up more space on the blockchain

Here’s an example of a P2PKH address:

17g24tOg1URxOylEyt9v3Nps5T8CKe2Gyd

• Segregated Witness Addresses(SegWit) or Bech32 Addresses

Segwit addresses are also known as Bech32 addresses or bc1 addresses because they start with bc1. This type of address limits the amount of information a transaction stores. As a result, Segwit addresses can save you about 16% on transaction fees. Because of this cost savings, it is the most commonly used Bitcoin address for transactions.

• Start with the characters “bc1”

This is an example of a Bech32 address:

bc1d42UNb54eBiGm0qEM0h6r2h8n532to9jtp186ns

• Compatibility or P2SH Addresses

Compatibility addresses, also known as Pay-to-Script-Hash (P2SH) addresses are much less common for your average crypto user. They enable certain specific functionalities, such as allowing senders of crypto to require multiple digital signatures before a transaction is authorized. P2SH addresses resemble P2PKH addresses.

• Start with the characters “3”

Here’s an example of a P2SH address:

3T74h2ClRP93NOwAviersyiWkqpHcLYBs

• Taproot or BC1P Addresses

This type of address starts with bc1p. Taproot or BC1P addresses help to provide spending privacy during transactions. Their transactions are smaller than legacy addresses but a bit bigger than native Bech32 addresses.

• Start with the characters “bc1p”

• Supported by certain Bitcoin wallets like Xverse, UniSat, MagicEden and Leather and are frequently used for transactions involving assets that make use of Taproot, such as Ordinals, BRC-20 tokens and Runes

An example of a BC1P address is as follows:

bc1prwgcpptoxrpfl5go81wpd5qlsig5yt4g7urb45e

• Sending Bitcoin Across Different Addresses

You can send from one Bitcoin address to another.

If there’s a problem, it’s probably with your service or wallet. Upgrade your wallet to the latest version to fix the issue.

Your wallet client manages your Bitcoin address. You shouldn’t have any problems, especially if you check the address is correct before sending.