What is an address type

TokenPocket introduces you to the BTC address types.

A Detailed Guide to Bitcoin Address Types

Bitcoin addresses serve as unique identifiers on the Bitcoin network for sending and receiving BTC, akin to bank account numbers. Different address types correspond to distinct technical implementations and use cases. The four primary types currently in use are P2PKH, P2SH, SegWit (Bech32), and Taproot (P2TR). Below, we provide a detailed explanation of each type’s definition, characteristics, and applications.

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

• Prefix: Starts with "1"

• Example: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa

• Technical Principle: P2PKH is the original Bitcoin address format, based on a public key hash. The sender locks BTC to a hash of the recipient’s public key, and the recipient must provide a corresponding private key signature to unlock the funds.

• Characteristics:

  • Advantages: Highly compatible, supported by nearly all Bitcoin wallets and exchanges.

  • Disadvantages: Larger transaction data size, resulting in relatively high fees.

• Use Case: Suitable for early adopters or scenarios with no need for advanced features, though its usage has declined with the advent of newer technologies.

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

• Prefix: Starts with "3"

• Example: 3EktnHQD7RiAE6uzMj2ZifT9YgRrkSgzQX

• Technical Principle: P2SH allows BTC to be sent to a script hash rather than directly to a public key. The recipient must provide a signature or data (e.g., multi-signature) that matches the script’s conditions to spend the funds.

• Characteristics:

  • Advantages: Supports complex transactions (e.g., multi-signature, time locks), with less data usage and lower fees than P2PKH.

  • Disadvantages: Does not fully leverage the latest Bitcoin network optimizations.

• Use Case: Widely used in scenarios requiring enhanced security, such as multi-party custody wallets or enterprise accounts.

3. Segregated Witness Address (Native SegWit / Bech32 - Pay to Witness Public Key Hash or Pay to Witness Script Hash)

• Prefix: Starts with "bc1q"

• Example: bc1qw508d6qejxtdg4y5r3zarvary0c5xw7kv8f3t4

• Technical Principle: SegWit (Segregated Witness) is a significant Bitcoin upgrade that separates signature data from the transaction body, improving block space efficiency. Bech32 is a modern encoding format designed for SegWit, using only lowercase letters and numbers for readability and error prevention.

• Characteristics:

  • Advantages: Smaller transaction size, significantly lower fees; modern encoding reduces input errors.

  • Disadvantages: Some older wallets or services may not support it.

• Use Case: The current mainstream recommended address type, ideal for daily transactions, especially for cost-conscious users.

4. Taproot Address (P2TR - Pay to Taproot)

• Prefix: Starts with "bc1p"

• Example: bc1p0xlxvlhemja6c4dqv22uajgphnq5ev7a0z0f3d9t8n7w9m5q8kqg8v5z7n

• Technical Principle: Introduced in Bitcoin’s 2021 upgrade, Taproot integrates Schnorr signatures and MAST (Merkelized Abstract Syntax Tree) to enable efficient signature verification and complex script execution while enhancing privacy.

• Characteristics:

  • Advantages: Stronger privacy, lower costs for complex transactions (e.g., smart contracts), and excellent future scalability.

  • Disadvantages: As a newer technology, wallet and platform support is still expanding.

• Use Case: Ideal for developers or users seeking privacy and advanced features, representing a key direction for Bitcoin’s future ecosystem.

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Comparison and Selection Guide

Address Type	Prefix	Advantages	Disadvantages	Recommended Use Case
P2PKH	1	High compatibility	Higher fees	Legacy users, simple transactions
P2SH	3	Supports complex scripts	Not fully optimized	Multi-signature, security needs
SegWit	bc1q	Low fees, user-friendly	Limited support	Everyday use
Taproot	bc1p	Strong privacy, powerful	Limited adoption	Advanced users, future trends

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Key Information for Users

• Identification: The address type can be determined by its prefix. Ensure the recipient’s wallet supports the chosen format before sending.

• Wallet Selection: Opt for modern wallets (e.g., TokenPocket) that support multiple address types for flexibility.

• Trends: With ongoing Bitcoin upgrades, SegWit and Taproot are becoming the standard. New users are encouraged to prioritize these types.