What type of address to choose: a complete breakdown of the main types of Bitcoin addresses

Let's start with the basics: what is an address in the BTC network

A Bitcoin wallet address is a public identifier for receiving and sending transactions. It can be thought of as a mailing address in the digital world: anyone can send you BTC if they know this address, but only the owner of the private key will gain access to the funds.

On the blockchain, an address serves as the “public part” of your wallet. It is a unique combination of letters and numbers that defines the specific location of your assets. An interesting historical fact: the most famous Bitcoin address — 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa, belongs to the creator of the network. It still holds 50 BTC from the first block mined on January 3, 2009.

Three address formats: from Legacy to Bech32

The Bitcoin network supports three main types of addresses, each of which differs in format and characteristics:

Legacy addresses (P2PKH): classic option

This is the original format that appeared along with the system itself. Legacy addresses start with the symbol “1” and look like this: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa.

The main drawback is higher transaction fees and slow processing. The Segregated Witness technology has not been applied to this format, so they take up more space in the block. However, Legacy addresses are still widely used and supported by all wallets and exchanges.

SegWit addresses (P2SH): an optimized version

They appeared to solve scalability issues. SegWit addresses start with “3” and have the form: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy.

These addresses use Segregated Witness technology, which reduces the size of transactions in a block, lowering fees by approximately 30-50% compared to Legacy. The processing speed has improved, and they are better suited for frequent operations.

Bech32 addresses (Native Segwit): the most modern format

They start with the prefix “bc1” and look like bc1qwes635e7dl0dxzlc2q044arj5h0e6n4z06pl4a. This is the most efficient format available.

Bech32 provides the lowest fees among all types, is shorter in length, and contains built-in error checking. Support for this format is constantly expanding, although some older wallets may still encounter issues.

Compatibility between formats: myth or reality?

The main question of users: can BTC be safely transferred between different types of addresses?

Answer: yes, without any technical issues. The network fully supports sending bitcoins from Legacy to SegWit, from Bech32 to Legacy, and between any other combinations. The blockchain is designed to ensure backward compatibility.

However, there are several points to consider when translating:

Fee Level: if initiating a transaction from a Legacy address, the fee may be higher as the format is less optimized. The recipient pays the same amount regardless of the type of their address.

Wallet Support: Most modern applications work with any format, but very old wallets may not recognize Bech32. Before transferring, make sure your software is up to date.

Exchange Policy: some platforms restrict withdrawals to certain types of addresses. Check the specific exchange's rules before proceeding with the operation.

Access to the receiving address: when transferring, be sure to have the private key or mnemonic phrase of the wallet that will receive the funds.

How to create a Bitcoin wallet address

To obtain an address, you first need to create a wallet. There are several options:

Hardware solutions are physical devices like Ledger or Trezor that store BTC offline. Maximum level of security.

Software applications — mobile or desktop wallets installed on your device. Suitable for active trading and small amounts.

Web wallets - accessible through a browser. Convenient but require more caution with passwords.

When creating any wallet, the system automatically generates an address ( or several addresses ). Most applications allow for the creation of new addresses on the fly, which enhances privacy.

Do I need to change the address after use?

A bitcoin address does not expire and can be used indefinitely. Technically, you can receive BTC at one address for years without any issues.

However, security experts recommend creating a new address for each incoming transaction. This complicates the analysis of the payment chain and increases anonymity. Some modern wallets do this automatically with each address request.

The main rule: protect your private key

If the address is the public part of the wallet, then the private key is the secret password that gives full control over the funds. It should not be shared with anyone, including customer support.

A private key is typically represented as a mnemonic phrase (12 or 24 words ). Keep this phrase in a safe place — it is the only way to recover access to your wallet if you lose your password or device.

Final Recommendations for Choosing a Format

For beginners: start with Bech32 addresses if your wallet supports them. This is a modern standard with better features.

For active traders: use SegWit addresses for several positions below Legacy fees, but with full compatibility everywhere.

For long-term storage: any format works equally well. Focus on protecting the private key.

Choose the appropriate type of address based on your needs for security, convenience, and cost savings on fees. Remember: in the world of cryptocurrencies, control over the private key means control over your assets.