Due to the historical development of Bitcoin over time, there are different types of Bitcoin addresses. These stem from the exact type of spending condition that is imposed on the coins, and can be identified by their starting characters.
Here are some examples:
- 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa is a standard Bitcoin address, which begins with "1".
- 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy is a script-based address, commonly used for more complex wallets like multisig, and starts with "3".
- bc1qw508d6qejxtdg4y5r3zarvary0c5xw7kv8f3t4 represents a modern ‘native SegWit’ Bitcoin address, starting with "bc1q".
- bc1p0xlxvlhemja6c4dqv22uapctqupfhlxm9h8z3k2e72q4k9hcz7vqzk5jj0 is an example of the most recent Taproot-derived Bitcoin address, which offers greater privacy because the exact spending condition is not revealed to anyone attempting blockchain analysis. For instance, Taproot can make Lightning channel opens and cooperative closes look like ordinary single-key payments for channels built on Taproot outputs, and it can obfuscate more complex inheritance or multi-stage vaulting scripts in most cases. Taproot addresses start with “bc1p”.
Note the different Bitcoin address types are fully interoperable: you can send bitcoin from one address type to another because they all settle on the same Bitcoin ledger. No conversion happens; the formats just describe how funds are locked.
Address formats at a glance: Bitcoin has four main address formats, told apart by their first characters. Legacy (P2PKH) starts with "1". Pay-to-Script-Hash (P2SH) starts with "3" and often backs multisig. Native SegWit (P2WPKH, Bech32) starts with "bc1q". Taproot (P2TR, Bech32m) starts with "bc1p". The newer Bech32 and Bech32m formats generally cost less in fees and include stronger error detection than the older "1" and "3" formats.
Why Newer Address Formats Cost Less in Fees
Transaction fees on Bitcoin scale with how much block weight a transaction occupies, not with the amount sent. SegWit and Taproot move the signature data into a discounted part of the transaction, so spending from a "bc1q" or "bc1p" address typically takes less weight than spending from a Legacy "1" address. In practice this means lower fees for the same payment. The exact saving varies with the transaction, but moving funds onto a SegWit or Taproot format is one of the simplest ways to reduce what you pay miners over time.
Can you send between different address formats?
Yes. Address formats are fully interoperable: bitcoin from a Legacy "1" address can be sent to a "bc1p" Taproot address and the reverse, because all formats settle on the same ledger. The sending wallet does not need to use the same format as the receiving address. The only practical limit is on the sending side. Some older wallets and services cannot yet generate or send to Bech32m ("bc1p") destinations, so if a payment to a Taproot address is rejected, the sender's software, not the address, is usually out of date.
The Role of the Checksum in Every Address
Every Bitcoin address includes a built-in checksum, a few characters derived from the rest of the address that let wallet software detect typos before a transaction is broadcast. If you mistype a character, a compliant wallet rejects the address instead of sending funds into the void. Bech32 and Bech32m strengthen this further with an error-detection scheme designed to catch the kinds of mistakes people make when copying addresses by hand.
Which address type should you use?
For new payments, a Taproot ("bc1p") or native SegWit ("bc1q") address is the practical default: lower fees, stronger error detection, and in Taproot's case improved privacy for more complex spends. Most current wallets generate these formats automatically; the Blockstream app generates native SegWit (bc1q) receive addresses and can send to Taproot (bc1p) addresses. Legacy "1" and "3" addresses still work and remain spendable, so there is no urgency to move existing funds, but there is little reason to choose them for fresh receiving addresses.
Frequently Asked Questions
How do I tell what type a Bitcoin address is?
Read the first characters. An address beginning with "1" is Legacy (P2PKH), "3" is Pay-to-Script-Hash (P2SH), "bc1q" is native SegWit (Bech32), and "bc1p" is Taproot (Bech32m). The prefix alone identifies the format, which also hints at the fee profile and capabilities of that address.
Are all Bitcoin address types compatible?
Yes. Because every format settles on the same Bitcoin ledger, any address type can send to and receive from any other. A wallet using one format can pay an address using a different format without conversion. The only constraint is whether the sender's software supports generating or sending to the newest Bech32m format.
Which Bitcoin address type has the lowest fees?
Native SegWit ("bc1q") and Taproot ("bc1p") addresses generally produce the lowest fees because their signature data receives a weight discount. Spending from these formats costs less block weight than spending from a Legacy "1" address for an equivalent transaction, which translates into lower miner fees.
Is it safe to receive to an older Legacy address?
Yes. Legacy "1" and "3" addresses remain fully valid and any bitcoin sent to them is spendable. They simply tend to carry higher fees on spend and lack some of the error-detection improvements of newer formats. For new addresses, a SegWit or Taproot format is the better default.
Why do some wallets still default to "3" addresses?
The "3" Pay-to-Script-Hash format predates native SegWit and is widely supported, so some wallets and services keep it as a default for maximum compatibility. It frequently wraps multisig and SegWit setups. Newer wallets increasingly default to "bc1q" or "bc1p" for the lower fees and stronger error detection those formats provide.