About the Different Types of Bitcoin Address Formats
Currently, there are three different Bitcoin address formats. You can tell the difference between the types of addresses by if the address starts with a 1, 3, or bc1.
Not all these address types are fully compatible on all platforms, so it is important to send to a compatible address.
In general, you can save yourself some headaches by using the one with a 3 in front of it (what we and others call the compatibility address format) if given the choice. This is especially when sending/receiving to/from an exchange or third-party wallet since some don’t support bc1 addresses.
If you want to know more, for example, if you are trying to make a transaction on a third-party platform and it is being rejected due to compatibility, here is a simple explainer of why things are like this and which addresses will work together.
Segwit and the Three Formats
There used to only be one type of address, however, a feature was added to Bitcoin called “Segwit” to make transactions faster by decreasing block size.
SegWit essentially required two addresses formats to be added. One pure Segwit address, and one compatibility address to ensure Segwit and non-Segwit users could transact.
The result is three formats, one of which users can default to for simplicity’s sake in practice.
How the Three Formats of Bitcoin Addresses Work
P2PKH or Legacy Address Format (addresses start with “1”)
The traditional format Bitcoin started with. This format tends to have higher transaction fees than because it doesn’t use the upgrade. It can’t talk to Segwit addresses.
P2SH or Compatibility Address Format (addresses start with “3”)
This address type is widely supported and can be used to send funds to both Legacy and Segwit addresses. This makes it a smart choice for a casual user who is generating their own address.
Bech32 or Segwit Address Format (addresses start with “bc1”)
The Segwit address format. Using Segwit can lower transaction fees. Some third-party wallets and exchanges still don’t accept this format.
- Everything You Should Know About Bitcoin Address Formats. news.Bitcoin.com.
"Bitcoin Address Formats" contains information about the following Cryptocurrencies: