This week, the Kraken exchange declared their support of bech32 withdrawals for Litecoin. The trading platform used their Twitter account to notify users that all bech32 formats for Litecoin will be supported after the impending update on the exchange.
Kraken tweeted that after the update, the exchange Litecoin withdrawals will offer support for all address formats, including bech32, whose native SegWit starts with ‘ltc1′, M, a P2SH starting with'M,' and L, a non-P2SH starting with L. the tweet further stated that only new addresses would need to use the new formats, as existing addresses will not be affected.
Bech32 is a unique SegWit address that was first launched on the Bitcoin network through BIP 0173. Later on, it was introduced to the Litecoin blockchain. Bech32 addresses have a prefix 3 on both of the networks mentioned above. Litecoin follows the same format as Bitcoin because it is a fork of the world’s largest digital currency. Unfortunately, this similarity leads to confusion, where users accidentally send Bitcoin to P2SH Litecoin addresses or unintentionally send Litecoin to P2SH Bitcoin addresses.
The Litecoin community has since developed a new format for bech32 addresses intending to resolve the conflict mentioned above. Under the new format, the new addresses will have the prefix M or ltc1, with non-P2SH addresses starting with L. the exchange further explained that only new addresses would need the new formats, as the existing ones won’t be affected.
Before Kraken added bech32 support, Ledger was the latest platform to add the new address format. The news was welcomed by the wallet’s users, as many believe that it will lower transaction fees by a significant margin. That said, there are some crypto enthusiasts that the move was rushed because many services are yet to add support for the bech32 address format.