Bitcoin addresses are the fundamental building blocks of the cryptocurrency network, consisting of 26–35 alphanumeric characters used to send and receive BTC. Over time, three primary address formats have emerged: P2PKH (Legacy), P2SH (Pay-to-Script-Hash), and Bech32 (native SegWit). Each format has distinct design goals, compatibility levels, and fee implications. Understanding these differences is crucial for selecting the right wallet, exchange, or platform.
P2PKH: The Original Bitcoin Address Format
Addresses starting with a '1' are P2PKH (Pay-to-Pubkey Hash) addresses, for example 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2. This is the original Bitcoin address format, still widely supported. P2PKH is not SegWit compatible, but it can send funds to any other address type. However, because legacy transaction sizes are larger, average fees when spending from a P2PKH address are typically higher than from SegWit addresses. Despite the higher fees, P2PKH remains universally supported by wallets and exchanges.
P2SH: Enhanced Functionality with Script Support
Addresses starting with a '3' are P2SH (Pay-to-Script-Hash) addresses, such as 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy. This format enables complex scripts, most commonly for multisignature (multisig) addresses requiring multiple signatures to authorize a transaction. P2SH also supports non-native SegWit via P2WPKH-in-P2SH. It offers good compatibility and can send funds to both P2PKH and Bech32 addresses. P2SH is a popular middle ground, widely adopted by exchanges and wallets.
Bech32: Native SegWit for Lower Fees
Bech32 addresses start with “bc1” and are longer than the P2-style formats. They are the native SegWit format, offering smaller transaction sizes and thus lower fees. For example, address bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq. Most modern software and hardware wallets support Bech32, but a minority of exchanges still do not support receiving to this format. As of early 2025, less than 1% of all BTC is held in Bech32 addresses, though adoption is gradually increasing. Some hardware wallets like older models of Ledger and KeepKey initially lacked support but have since updated.
Bitcoin Cash Address Formats
Bitcoin Cash (BCH) uses two address formats: the legacy format (starting with '1') and the Cash Address format (starting with 'q' or 'bitcoincash:q'). The Cash Address format is based on Bech32 and was introduced to prevent confusion between BCH and Bitcoin addresses. Most BCH wallets support both formats and allow users to switch between them.
Which Format Should You Use?
For everyday users, Bech32 is recommended for its lower fees and better efficiency. If you require multisig functionality, P2SH is your only practical choice. Legacy P2PKH remains a fallback due to universal support. Always check your wallet and exchange compatibility before generating a new address. Upgrading to a SegWit-enabled wallet can significantly reduce transaction costs over time.