A Bitcoin address is a string of 26-35 alphanumeric characters that serves as the destination for sending and receiving bitcoin. While any address can theoretically send funds to any other address on the network, the specific format of the address can affect transaction fees, compatibility, and functionality. Bitcoin Core currently supports three main address formats: P2PKH (Legacy), P2SH, and Bech32. Additionally, Bitcoin Cash (BCH) uses its own Cash Addr format to distinguish itself from BTC.
P2PKH (Legacy) Address Format
Legacy addresses start with the digit “1”, for example 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2. This is the original Bitcoin address format (Pay-to-Pubkey Hash). It is not SegWit-compatible, meaning transactions from P2PKH addresses are larger in size and therefore incur higher fees compared to SegWit-enabled addresses. However, legacy addresses are universally supported by all wallets and exchanges, and they can send funds to any other address format without issues.
P2SH Address Format
P2SH addresses start with the digit “3”, such as 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy. P2SH (Pay-to-Script-Hash) enables more advanced functionality, most notably multisignature transactions where multiple signatures are required to authorize a transfer. It is also used to support non-native SegWit transactions through a mechanism called P2WPKH-in-P2SH, which reduces fees compared to legacy addresses. P2SH is widely supported and can transact with both P2PKH and Bech32 addresses.
Bech32 Address Format
Bech32 addresses are easily recognizable by their “bc1” prefix, for example bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq. This is the native SegWit address format, offering the smallest transaction size and therefore the lowest fees among all Bitcoin address types. While most modern software and hardware wallets support Bech32, some exchanges and older wallets (e.g., Ledger and KeepKey) have been slow to adopt it. According to recent data, less than 1% of all BTC is stored in Bech32 addresses, but adoption is gradually increasing.
Bitcoin Cash (BCH) Address Formats
Bitcoin Cash addresses can be either the legacy format (starting with “1”) or the newer Cash Addr format, which begins with “q” or “bitcoincash:q”. The Cash Addr format is based on Bech32 and was introduced to prevent confusion between BCH and BTC, reducing the risk of sending funds to the wrong network. Most BCH wallets support both formats and allow users to switch between them.
Choosing the right address format is crucial for minimizing transaction costs and ensuring compatibility. For everyday transactions, Bech32 is recommended if both sender and receiver support it. For multisig needs, P2SH is the go-to option. Always verify that your wallet and exchange support the chosen format before sending funds.