Understanding Legacy, P2SH, SegWit & Taproot
Bitcoin addresses have evolved over time to improve efficiency, privacy, and functionality. Each new format introduces important benefits while remaining backwards-compatible with the network.
See the same wallet seed generate different addresses for each format. All addresses below are derived from the same private key!
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⚠️ This is a demo seed. Never use example seeds for real Bitcoin!
1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2
Only if receiving from very old wallets/exchanges that don't support newer formats. Generally avoid for new addresses.
3J98t1WpEZ73CNmYviecrnyiWrnqRhWNLy
Multi-signature wallets or when you need SegWit benefits but the sender doesn't support native SegWit (bc1...). Transitional format.
bc1qw508d6qejxtdg4y5r3zarvary0c5xw7kv8f3t4
Default choice for most users! Best balance of fee savings, compatibility, and security. Use unless you have a specific reason not to.
bc1p5cyxnuxmeuwuvkwfem96lqzszd02n6xdcjrs20cac6yqjjwudpxqkedrcr
Future-proof choice! Use when wallet supports it. Best for privacy-conscious users, advanced multi-sig, or maximum fee savings. Adoption growing rapidly.
See how much you can save by using modern address formats!
By switching from Legacy to Taproot, you save $550/year in fees!
Over 10 years at current Bitcoin price: $5,500 saved
Single-sig and multi-sig transactions are easily distinguishable. Anyone can tell if an address is multi-sig by looking at the transaction.
Better privacy through witness data separation, but multi-sig still distinguishable from single-sig.
Game-changer! Multi-sig and single-sig transactions look identical. Complex smart contracts appear as simple payments.
Which address formats does your wallet support?
| Wallet | Legacy (1...) | P2SH (3...) | SegWit (bc1q...) | Taproot (bc1p...) |
|---|---|---|---|---|
| Bitcoin Core | ✓ | ✓ | ✓ | ✓ |
| Electrum | ✓ | ✓ | ✓ | ✓ |
| Ledger Hardware | ✓ | ✓ | ✓ | ✓ (2022+) |
| Trezor Hardware | ✓ | ✓ | ✓ | ✓ (2022+) |
| BlueWallet | ✓ | ✓ | ✓ | ✓ |
| Sparrow Wallet | ✓ | ✓ | ✓ | ✓ |
| Muun | ✓ | ✓ | ✓ | Partial |
| Old Wallets (pre-2017) | ✓ | ✓ | ✗ | ✗ |
Important: Most modern wallets (2020+) support all formats. If sending TO someone using an old wallet, they may not support SegWit/Taproot addresses.
One wallet seed can generate addresses in ALL formats. Your private keys control Bitcoin, not the address format!
Taproot saves up to 52% vs Legacy. Over years, this adds up to significant savings—hundreds or thousands of dollars!
Taproot makes multi-sig indistinguishable from single-sig. Better privacy for everyone, especially advanced users.
Default recommendation: Use Native SegWit (bc1q...) or Taproot (bc1p...) for new addresses. Legacy is obsolete.
All formats work on the same Bitcoin network. You can send from any format to any other format without issues.
Taproot adoption is growing fast. Expect it to become the standard as more wallets add support (already widespread in 2024+).
For most users: Use Native SegWit (bc1q...) as your default.
For advanced users or privacy-focused: Use Taproot (bc1p...) if your wallet supports it.
Avoid: Creating new Legacy (1...) addresses unless absolutely necessary for compatibility.