Bitcoin address types (Bech32, P2SH, legacy)

Legacy addresses starting with 1 are the original pay-to-public-key-hash format. Addresses starting with 3 are pay-to-script-hash, used for multisig and for wrapped SegWit during the transition. Native SegWit addresses start with bc1q and use the Bech32 encoding from BIP-173, while Taproot addresses start with bc1p and use the Bech32m variant from BIP-350. Each type locks coins with a different script.

The main practical difference is cost. Spending from native SegWit or Taproot outputs takes fewer virtual bytes than spending legacy ones, so fees are noticeably lower, especially for transactions with many inputs. Bech32 addresses are also all lowercase and include stronger error detection, which reduces typing mistakes. Taproot adds Schnorr signatures and makes complex spending conditions look like ordinary payments.

All types can send to each other on Bitcoin, although some old services still fail to recognise bc1p addresses. Address prefixes differ on testnet and on other coins, and a 3… address on Litecoin is not a Bitcoin address. Wallets derive each type from a different derivation path, so restoring a seed may require choosing the right type to see funds.