Bitcoin Wallet Addresses

Bitcoin wallet address types each possess distinct characteristics, with some being older than others. For instance, Legacy addresses were the initial Bitcoin address type, while Taproot accounts represent the latest development.

The variations among these account types primarily revolve around user interaction fees, and certain exchanges may not recognize specific address types, such as Taproot, compared to others.

Native SegWit and Taproot are protocol upgrades introduced to address Bitcoin's scalability issues. Native SegWit, an evolution of SegWit, helps reduce network congestion by creating new types of addresses, while Taproot streamlines transaction verification, making transactions faster and more cost-efficient. Currently, NativeSegwit addresses provide optimal flexibility and compatibility while adhering to transaction fee standards and maximizing information stored in transactions. More information on each are below.

Legacy (P2PKH) Addresses

The origins of Bitcoin transactions, Legacy addresses are the inaugural Bitcoin format since its inception. Distinguished by the "1" prefix, these addresses, though universal, incur higher transaction fees. Despite newer address types, Legacy remains a steadfast option for Bitcoin transactions.

Nested SegWit (P2SH) Addresses

Bridging the past and the future, Nested SegWit addresses, are marked by the "3" prefix. Born from the Segregated Witness (SegWit) upgrade, they serve as a bridge between old and new. Also known as "Legacy SegWit," these addresses offer reduced fees and enhanced security, making them a pragmatic choice in the Bitcoin landscape.

Native SegWit (Bech32) Addresses

Unleashing Efficiency, Native SegWit addresses, featuring the "bc1q" prefix, signify a leap in Bitcoin address technology. A result of the SegWit upgrade, these addresses optimize transactions with lower fees and improved scalability. Despite compatibility challenges, Native SegWit holds the promise of transforming Bitcoin transactions.

Taproot (P2TR) Addresses

With a glimpse into Bitcoin's future, Taproot addresses are identified by the "bc1p" prefix. Marking a milestone in Bitcoin's journey, Taproot introduces advanced security, enhanced privacy, and newfound flexibility. A recent protocol upgrade, Taproot addresses showcase the exciting possibilities ahead for Bitcoin transactions.

Should I Use a Taproot, SegWit, or Legacy BTC address?

Sending bitcoin from a Taproot or Native SegWit address will require a lower fee compared to sending an equivalent transaction from a legacy (non-SegWit) address.