As the Bitcoin protocol evolves, different types of addresses have emerged in the Bitcoin network to meet security and efficiency requirements. The following are four important types of addresses in Bitcoin:
Legacy Address (P2PKH)
Legacy addresses are the earliest address format used by Bitcoin. They start with the number 1, for example: 1MbeQFmHo9b69kCfFa6yBr7BQX4NzJFQq9
This type of address is based on the Pay-to-Public-Key-Hash (P2PKH) script. Its transactions take up a lot of space on the blockchain, are relatively slow to process, and are not anonymous enough.
Nested SegWit Addresses (P2SH)
Nested SegWit is a P2SH Bitcoin address that starts with the number 3, for example: 3EmUH8Uh9EXE7axgyAeBsCc2vdUdKkDqWK
SegWit is a technology upgrade designed to solve Bitcoin transaction scalability issues, increase network capacity, and reduce transaction fees. Addresses using SegWit reduce the size of BTC transactions, thereby reducing transfer fees.
Native SegWit Address (P2WPKH)
Native SegWit is a Bitcoin address that starts with bc1q and uses the Bech32 encoding scheme, for example: bc1qj89046x7zv6pm4n00qgqp505nvljnfp6xfznyw
Compared with Nested SegWit, Native SegWit addresses further optimize transaction processing and perform better in terms of inter-wallet compatibility, readability, and space saving.
Taproot Address (P2TR)
Taproot is a type of Bitcoin address that starts with bc1p and uses the Bech32m encoding scheme. It is also the latest type of Bitcoin address. For example: bc1p8denc9m4sqe9hluasrvxkkdqgkydrk5ctxre5nkk4qwdvefn0sdsc6eqxe
Taproot is a major upgrade for Bitcoin activated at the end of 2021, which introduced a new signature scheme called Schnorr signatures, which allows complex multi-signature transactions to look like ordinary transactions, thereby increasing privacy.