When transacting with Bitcoin (BTC), you'll encounter three distinct address formats: Native SegWit (bech32), Nested SegWit (P2SH), and Legacy (P2PKH). Each offers unique advantages depending on your transaction needs. This guide explores their differences and provides actionable recommendations for selecting the optimal format.
Why Do Three BTC Address Types Exist?
Bitcoin's evolution introduced technological upgrades to improve:
- Transaction efficiency (smaller data size)
- Fee reduction (lower costs through SegWit)
- Enhanced security (signature malleability fixes)
These advancements led to three address formats coexisting to accommodate varying levels of wallet compatibility.
Key Characteristics of BTC Address Formats
1. Legacy (P2PKH)
- Prefix: Starts with "1" (e.g.,
1BvBMSE...) Pros:
- Universally compatible with all wallets/services
Cons:
- Larger transaction size → higher fees
- No SegWit benefits
👉 Best for sending to very old wallets
2. Nested SegWit (P2SH-P2WPKH)
- Prefix: Starts with "3" (e.g.,
3J98t1W...) Pros:
- Partial SegWit efficiency (≈25% fee savings vs. Legacy)
- Backward-compatible with pre-SegWit systems
Cons:
- Still larger than Native SegWit transactions
👉 Ideal for mixed wallet ecosystems
- Still larger than Native SegWit transactions
3. Native SegWit (P2WPKH)
- Prefix: Starts with "bc1" (e.g.,
bc1qar0...) Pros:
- Smallest transaction size (up to 50% fee reduction)
- Full SegWit benefits + future upgrade flexibility
Cons:
- Not supported by some older wallets
👉 Optimal choice for modern wallets/exchanges
- Not supported by some older wallets
How to Switch BTC Address Formats on Keystone Wallet
Access BTC Settings:
- Navigate to [BTC] → [Address Settings]
Select Format:
- Choose between Legacy/Nested/Native SegWit
Confirm:
- Press [<] to return to the main screen
Integrating with BlueWallet
Pair Devices:
- On Keystone: [Menu] → [Connect Software Wallet] → [BlueWallet]
- Scan the QR code via BlueWallet’s mobile app
Change Address Path:
- Re-initiate pairing to select a different format
FAQ: BTC Address Selection
Q1: Which format has the lowest fees?
A: Native SegWit ("bc1") offers the most significant fee savings due to optimized transaction size.
Q2: Can I send from a Legacy address to a Native SegWit address?
A: Yes! All formats are interoperable, but fees depend on the sender's address type.
Q3: Why does my exchange only accept "3" addresses?
A: Some platforms still use Nested SegWit for backward compatibility. Check their deposit requirements.
Q4: Is Native SegWit more secure?
A: While equally secure for transactions, Native SegWit eliminates historical vulnerabilities like signature malleability.
Q5: How do I know if my wallet supports "bc1" addresses?
A: Consult your wallet’s documentation or test with a small transaction first.
By strategically selecting your BTC address format, you optimize for cost, speed, or compatibility. Prioritize Native SegWit where possible, falling back to Nested SegWit or Legacy only when necessary. This ensures you harness Bitcoin’s full technical potential while maintaining flexibility across ecosystems.