Bitcoin addresses are the cornerstone of sending and receiving BTC, functioning much like bank account numbers in traditional finance. As Bitcoin’s ecosystem evolves—especially with upgrades like SegWit and Taproot—new address formats have emerged, each with distinct features and benefits. Understanding these formats is essential for both beginners and experienced users navigating the world of cryptocurrency.
This guide breaks down the major types of Bitcoin addresses, their technical foundations, security implications, and real-world usage. Whether you're setting up a wallet, receiving payments, or exploring advanced protocols like Ordinals, knowing the differences between address types helps ensure faster transactions, lower fees, and improved privacy.
👉 Discover how modern Bitcoin wallets support next-gen address formats
What Is a Bitcoin Address?
A Bitcoin address is a unique string of letters and numbers used to receive Bitcoin. It’s derived from cryptographic keys—specifically, a public key generated from your private key. Anyone can send BTC to your address, but only the holder of the corresponding private key can spend it.
Bitcoin addresses typically start with different characters depending on their format. These prefixes help identify the type of address and its underlying technology.
For example:
1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa(Legacy P2PKH)3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy(P2SH)bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq(Bech32 Native SegWit)bc1p4qhjn9zdvkux4hr48xy9ln6evj45ekjmr9s97n0c2k556825pfsq0pgrg0(Bech32m Taproot)
Each of these belongs to a different generation of Bitcoin addressing, reflecting improvements in efficiency, cost, and scalability.
Types of Bitcoin Addresses
1. P2PKH (Pay-to-Public-Key-Hash) – Legacy Addresses
P2PKH addresses are the original Bitcoin address format, introduced by Satoshi Nakamoto. They begin with the number "1" and were the standard for early Bitcoin transactions.
Example: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2
These addresses use SHA-256 hashing and are based on ECDSA cryptography. While fully functional, they are less efficient than newer formats:
- Higher transaction fees due to larger data size
- No native support for Segregated Witness (SegWit), leading to slower confirmation times
Despite their limitations, many older wallets and services still use P2PKH. However, they’re increasingly being phased out in favor of more advanced options.
2. P2SH (Pay-to-Script-Hash) – Enhanced Flexibility
P2SH addresses start with the number "3" and allow more complex transaction conditions, such as multi-signature setups or time-locked transfers.
Example: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy
The main advantage of P2SH is flexibility:
- Supports multi-sig wallets (e.g., requiring 2 out of 3 signatures to spend)
- Enables smart contract-like logic within Bitcoin’s limited scripting system
P2SH also introduced nested SegWit, where a SegWit-compatible address is wrapped inside a P2SH structure. This allowed early adoption of SegWit without full wallet support. While functional, nested SegWit isn't as efficient as native implementations.
👉 See how top wallets generate secure Bitcoin addresses automatically
3. Bech32 (Native SegWit) – Efficient and Cost-Effective
Bech32 addresses begin with "bc1q" and represent native Segregated Witness (SegWit) format. Introduced in 2017 via BIP 173, Bech32 was designed specifically for SegWit compatibility.
Example: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq
Key benefits include:
- Lower transaction fees – SegWit reduces data load by separating signature data
- Improved scalability – More transactions fit per block
- Better error detection – Built-in checksum prevents mistyped addresses
- Faster confirmations – Due to network incentives for compact blocks
Bech32 uses a case-insensitive encoding scheme called Base32, making it easier to read and less prone to input errors. However, some older wallets don’t recognize Bech32, which has slowed adoption—though this is rapidly changing.
4. Bech32m (Taproot) – The Future of Bitcoin Addressing
Bech32m addresses start with "bc1p" and are associated with the Taproot upgrade, activated in November 2021. This format was introduced via BIP 350 to support Schnorr signatures and Merkleized Abstract Syntax Trees (MAST).
Example: bc1p4qhjn9zdvkux4hr48xy9ln6evj45ekjmr9s97n0c2k556825pfsq0pgrg0
Taproot brings several groundbreaking improvements:
- Enhanced privacy – All transaction types (single-signature, multi-sig, smart contracts) look identical on-chain
- Reduced fees – More efficient scripts mean smaller transaction sizes
- Greater flexibility – Enables complex DeFi-like logic on Bitcoin
- Better scalability – Supports layer-2 applications like Lightning Network
Bech32m differs slightly from Bech32 in its checksum algorithm, preventing compatibility issues and ensuring future extensibility.
While not all wallets support bc1p addresses yet, major platforms like OKX and others now enable Taproot deposits and withdrawals.
Frequently Asked Questions
What’s the difference between bc1q and bc1p addresses?
bc1q addresses use the Bech32 format for native SegWit transactions, while bc1p addresses use Bech32m for Taproot-enabled wallets. The key distinction lies in cryptographic capabilities: Taproot supports advanced features like Schnorr signatures and improved privacy through script aggregation.
Can I send Bitcoin from a legacy (1...) address to a Taproot (bc1p...) address?
Yes. Bitcoin networks allow cross-format transactions. You can send BTC from any address type to any other. However, sending from a legacy address may incur higher fees due to larger transaction size.
Are bc1p addresses safe to use?
Yes. bc1p addresses are built on robust cryptographic standards and offer enhanced security and privacy compared to older formats. Just ensure your wallet supports Taproot before using them.
Why do some wallets not support bc1p addresses?
Some wallets haven’t updated to support BIP 350 or Taproot functionality. As adoption grows, more developers are integrating full support. Always check wallet documentation before depositing funds.
Does using a newer address type reduce transaction fees?
Yes. Native SegWit (bc1q) and Taproot (bc1p) formats produce smaller transaction data, resulting in lower miner fees. Over time, this can lead to significant savings—especially for high-frequency traders or businesses.
Can I manually create a Bitcoin address?
Technically yes, but it's highly discouraged unless you fully understand cryptography and randomness generation. Most users should rely on reputable wallets that securely generate and store keys.
Why Address Format Matters in 2025
As Bitcoin continues evolving beyond simple peer-to-peer payments, address formats play a crucial role in enabling innovation. From Ordinals inscription activity to Lightning Network growth and decentralized applications on layer-2s, modern addressing standards underpin performance, cost-efficiency, and privacy.
Using outdated address types may result in:
- Higher fees
- Slower confirmations
- Missed opportunities for privacy
- Incompatibility with emerging protocols
Upgrading to Bech32 or Bech32m isn't just about technical superiority—it's about future-proofing your Bitcoin experience.
👉 Start using next-generation Bitcoin addresses today with integrated wallet tools
Final Thoughts
Bitcoin address formats have come a long way since the first "1..." address was created. From P2PKH to Taproot-powered bc1p addresses, each evolution reflects broader progress in security, efficiency, and functionality.
Understanding these differences empowers you to make smarter choices—whether you're storing savings, making daily payments, or experimenting with NFTs on Bitcoin via Ordinals.
As the network grows, adopting modern standards becomes not just beneficial, but essential. Choose wallets that support native SegWit and Taproot, verify address formats before transacting, and stay informed about ongoing upgrades shaping Bitcoin’s future.
Core Keywords:
Bitcoin address, bc1q address, bc1p address, SegWit, Taproot, Bech32, Bech32m, cryptocurrency wallet