Bitcoin Address Formats 101: What Every BTC Crypto User Should Know
There are many different Bitcoin (BTC) address formats that are related to different implementations. A wallet address has between 26 and 35 alphanumeric characters that allow users to send and receive Bitcoin. Each cryptocurrency has a different format for its addresses.
Why Are Formats So Important?
Address formats are the internet protocol of Bitcoin. There are different versions of the Internet Protocol such as IPv4 and IPv6. The same happens with Bitcoin. In general, these addresses do not have problems or conflicts to operate with one another. At the moment, there are three different address formats that it is possible to choose: P2PKH, P2SH, and bech32. There are just a few services and companies that support all of them.
Each of these formats has different positive and negative things. According to news.Bitcoin.com, if a Bitcoin address starts with a 1, this means that the address uses the P2PKH format. This is also known as a legacy address. This was the original format for Bitcoin addresses that work until now.
The term P2PKH means Pay-to-Pubkey Hash, or pay to the recipient’s public key. These legacy addresses are not compatible with Segregated Witness (SegWit), an implementation that allows transactions to be smaller in size and allow the network to process a larger number of transactions per block. It is also possible to send BTC from P2PKH wallets to a SegWit address. The fees paid by transactions sent from legacy addresses tend to be larger than those that have implemented SegWit.
The second address format is P2SH and it starts with a 3 rather than with a 1. P2SH means pay to script hash, enabling more elaborate functionality than legacy addresses. These are used by multi-sig wallets that require more than one authorization to sign the transaction. This address can be used to send funds to other addresses as well.
The Bech 32 address format is different from P2 addresses. These start with bc1 and they are longer than legacy or P2SH addresses. Bech32 is the native SegWit address format and it is supported by most software and hardware wallets. Most of the exchanges do not support this address format. Less than 1 percent of Bitcoin is stored in bech32 addresses. But this number is also growing.
Bitcoin Cash (BCH) addresses follow the legacy format that starts with a 1 or the Cash Address (Cash Addr) format that is based on bech 32.