Introduction | What are the types of Bitcoin addresses?

23-05-20 10:00

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Original title: "Popular Science | What are Bitcoin addresses?"

Source: "Plain Language Blockchain"

In the world of encryption, a wallet address is as important as a "bank card account" or a "shipping address". Any operation cannot be separated from it. With the birth of the Ordinals protocol, it has promoted the adoption of Bitcoin based on segregated witness and Taproot upgrades. This has allowed many people to use special header address formats such as "bc1p" for the first time. So how many types of wallet address formats does Bitcoin have, and what are their characteristics? Today, let's popularize it together...

01 What is a Bitcoin address?

Bitcoin address is used to send and receive Bitcoin, just like a traditional bank account. Anyone who has your bank account can send Bitcoin to you, and you can also transfer Bitcoin to other accounts.

Bitcoin addresses are strings composed of letters and numbers. Here are a few examples:

These Bitcoin addresses will display the source of receiving and sending Bitcoin, telling people where Bitcoin comes from and where it goes. It's actually like an email system for sending and receiving emails, except in the Bitcoin context, the email content is Bitcoin, the email address is a Bitcoin address, and the mailbox is a Bitcoin wallet.

However, it is worth noting that a single address does not necessarily mean a single user. There may be a group of people behind an address, and a person may also have multiple addresses.

02 Bitcoin Address Type Classification

From the above image, we can see that Bitcoin addresses all start with the prefixes 1, 3, or bc1. There are no other prefixes used. Why is this so? This is because they use a different address format. In fact, there are four main types of Bitcoin address formats:

1. Legacy/Pay-to-Public-Key-Hash (P2PKH) Address

These types of addresses are traditional Bitcoin addresses, called legacy addresses or Pay-to-Public-Key-Hash (P2PKH) addresses. This is because when Bitcoin was introduced in 2009, the only way to create an address was to start with a public/private key pair.

Today, this type of address is the most commonly used space in transactions, and therefore the most expensive type of address. However, these addresses are easy to identify because they all start with "1".

Example: 15f12gEh2DFcHyhSyu7v3Bji5T3CJa9Smn

Currently, this type of address is only used when using old wallets that are incompatible with new addresses.

2. Payment Script Hash Pay-to-Script-Hash (P2SH) Address

Compared with traditional addresses starting with "1", P2SH addresses are not hashes of public keys, but hashes involving certain technical scripts, which can be used for transfer matters requiring multiple signatures, and even can save transaction fees using segregated witness. Sending to a P2SH address is about 26% cheaper than using a wallet with old addresses.

Example: 35PBEaofpUeH8VnnNSorM1QZsadrZoQp4N

3. Segregated Witness (SegWit) Bech32 Address

Segwit addresses, also known as Bech32 addresses, are characterized by starting with bc1q. This type of Bitcoin address reduces the amount of information stored in transactions. They do not store signatures and scripts in transactions, but in witnesses. Therefore, compared to P2SH addresses, Segwit addresses can save about 16% of transaction fees and more than 38% compared to traditional addresses. Due to this cost savings, it is the most commonly used Bitcoin transaction address.

Example: bc1q42lja79elem0anu8q8s3h2n687re9jax556pcc

However, some trading platforms and wallets do not yet support Segwit addresses, so they will prompt users to send P2SH addresses. That's why most wallets still include options for creating P2SH or even old address wallets.

4. Taproot Address

In order to improve the efficiency of block space and reduce costs, SegWit introduced some changes to the construction of addresses. Therefore, based on SegWit addresses, Taproot addresses starting with "bc1p" were developed, which are referred to as main root addresses. These addresses further reduce storage space, improve transaction efficiency, and provide better privacy.

Example: bc1pmzfrwwndsqmk5yh69yjr5lfgfg4ev8c0tsc06e

03 Summary

Bitcoin addresses have some similarities to modern bank accounts, as bank accounts are also used to send assets in transactions. However, for Bitcoin addresses, what is sent is Bitcoin.

Although there are different types of Bitcoin addresses, these addresses are used in the same way and have cross-compatibility, so Bitcoin can be circulated between different addresses.

However, it is worth noting that encryption security has always been a concern. Please be sure to carefully check the address before sending encrypted assets to avoid unnecessary losses.