Why Different Address Types Exist
Bitcoin has existed since 2009 — and during that time, the protocol has evolved. Each generation brought a new address format that's more efficient, cheaper, or more private than the last. The problem: all four formats exist in parallel. And if you don't know which one you're using, you might be paying unnecessarily high fees on every transaction.
Here you'll get the deep dive into all four types — going well beyond what's covered in our Bitcoin Address Guide.
The Four Bitcoin Address Types in Detail
1. Legacy (P2PKH) — the original from 2009
Identification: Starts with 1
Example: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
Encoding: Base58Check
Legacy addresses are the original format Satoshi Nakamoto implemented. P2PKH stands for "Pay-to-Public-Key-Hash" — you send Bitcoin to the hash of a public key, and the recipient proves ownership by presenting the public key and a valid signature.
Technical background: In a Legacy transaction, signature data (witness data) must be carried in the main body of the transaction. This makes every transaction larger — and since Bitcoin fees are calculated per byte, you pay more.
When still useful: Only if a recipient or service exclusively accepts Legacy addresses. This is becoming increasingly rare.
Fees compared: ~100% (baseline)
2. P2SH / Wrapped SegWit — the 2017 compromise
Identification: Starts with 3
Example: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy
Encoding: Base58Check
P2SH ("Pay-to-Script-Hash") was originally introduced to enable complex transactions — such as multisig wallets requiring multiple people to approve a transaction. When the SegWit upgrade arrived in 2017, P2SH was used as a "wrapper": SegWit transactions were packaged in a P2SH format so older wallets could process them.
Technical background: Wrapped SegWit partially offloads signature data but doesn't reduce transaction size as much as native SegWit. It's a compromise format that prioritizes backward compatibility over efficiency.
When still useful: As a transitional solution, largely obsolete. Most wallets now support native SegWit directly.
Fees compared: ~74% of Legacy
3. Native SegWit / Bech32 — the current standard
Identification: Starts with bc1q
Example: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq
Encoding: Bech32
SegWit ("Segregated Witness") was Bitcoin's most important upgrade in years. The core idea: signature data is completely separated from the transaction body and moved to a separate area. This saves space, lowers fees, and increases network capacity.
Technical background: Native SegWit uses Bech32 encoding, specifically developed for this format. It has several advantages over Base58Check: better error detection through a built-in checksum (BCH code), lowercase-only (easier to read and display as QR codes), and more efficient encoding.
Why Bech32 catches typos better: Base58Check (Legacy) detects errors with ~99.99% probability. Sounds good, but Bech32 guarantees detection of every error up to 4 characters and is significantly more robust against adjacent character transpositions.
Fees compared: ~62% of Legacy
Our recommendation: This is the type most users should use. Virtually every modern wallet and exchange supports it.
4. Taproot / Bech32m — the future (since 2021)
Identification: Starts with bc1p
Example: bc1pmfr3p9j00pfxjh0zmgp99y8zftmd3s5pmedqhyptwy6lm87hf5sspknck9
Encoding: Bech32m
Taproot was activated in November 2021 and brings three key innovations: Schnorr signatures, MAST (Merkelized Abstract Syntax Trees), and improved privacy.
Technical background: Schnorr signatures replace the previous ECDSA signatures and enable aggregation of multiple signatures into a single one. This means: a multisig transaction (e.g., 3-of-5) looks on the blockchain exactly like a simple single-signature transaction. Nobody can tell from the outside whether it was a complex or simple transaction.
MAST allows defining complex conditions for a transaction while only revealing the path actually used. This saves space and protects privacy.
Fees compared: ~58% of Legacy (for simple transactions), even less for complex ones
Limitation: Not yet supported by all exchanges and services. Adoption is growing steadily.
Comparison Table
| Legacy (1...) | P2SH (3...) | SegWit (bc1q...) | Taproot (bc1p...) | |
|---|---|---|---|---|
| Introduced | 2009 | 2012/2017 | 2017 | 2021 |
| Fees | High (100%) | Medium (74%) | Low (62%) | Lowest (58%) |
| Error Detection | Good | Good | Very good | Very good |
| Privacy | Low | Low | Good | Very good |
| Compatibility | Universal | Very high | High | Growing |
| Complex Transactions | No | Yes (Multisig) | Yes | Yes (advanced) |
| 2026 Recommendation | ❌ Avoid | ❌ Outdated | ✅ Standard | ✅ Future-proof |
→ Check your address type: Free validator tool on the homepage
Are Different Address Types Compatible?
Yes. You can send from any address to any other address — Legacy to Taproot, SegWit to Legacy, everything works. The Bitcoin network understands all four formats.
The address type only affects fees and features on the sender's side. If you send from a Legacy address, you pay Legacy fees — regardless of whether the recipient has a SegWit address.
Which Type Should You Use?
For most users: Native SegWit (bc1q). Low fees, supported everywhere, proven.
For tech-savvy users: Taproot (bc1p). The lowest fees and best privacy, but check if your exchange supports it first.
Only as a last resort: Legacy (1...). Higher fees, no advantages for regular users.
→ Check any address: Free validator tool
→ Get started: Create a Bitcoin Address
Last updated: February 2026