Bitcoin Address Types Explained: Legacy, SegWit, Native SegWit, Taproot

Send Bitcoin to a friend and the address they give you might start with a 1, a 3, or the letters bc1. These are not random. They are different address types, each from a different era of Bitcoin, each with its own tradeoffs in transaction fees and privacy.

You do not need to memorise the cryptography. But knowing the four types helps you pay lower fees and avoid the small confusions that cost people time and sats.

Legacy: Addresses That Start With 1

Legacy addresses (1A1zP1...) are the original format from Bitcoin's earliest days. They still work perfectly and always will. The downside is cost. Legacy transactions take up more space, and space is what you pay for in fees. If you are choosing a type today, this is not it, but you may still receive to one from older services.

Nested SegWit: Addresses That Start With 3

When SegWit launched in 2017 it cut fees, but not every wallet understood the new format overnight. Nested SegWit (3J98t1...) was the bridge. It wraps the cheaper SegWit format inside the older style so anything could send to it. Fees sit between Legacy and the modern formats. You still see these on exchanges that have not updated.

Native SegWit: Addresses That Start With bc1q

Native SegWit (bc1qar0sr...) is the sensible default for most holders. It is the real SegWit format with no wrapper, so fees are noticeably lower than Legacy. Support is now close to universal. If you are not sure which type to pick, this is the safe answer.

Taproot: Addresses That Start With bc1p

Taproot (bc1p5cyxn...) is the newest format, activated in 2021. It brings the lowest fees and a privacy benefit: complex spending conditions, like the time-locked vaults bit21 builds, look the same on-chain as an ordinary payment. To an outside observer, a Taproot vault spend is indistinguishable from someone buying a coffee. Adoption is growing fast.

Which One Should You Use?

For everyday receiving, Native SegWit (bc1q) is the dependable choice with the widest support. If your wallet and the sender both support it, Taproot (bc1p) gives you the lowest fees and the best privacy. You can hold both. There is no need to pick one forever.

One practical note: you can always receive from any address type to any other. A Legacy sender can pay your Taproot address without issue. The type of your address does not limit who can pay you.

Why a Wallet Should Support All Four

Old coins sit on old address types. If you are importing a wallet you set up years ago, your Bitcoin might be spread across Legacy, Nested SegWit, and Native SegWit addresses all at once. A wallet that only understands one type would show you part of your balance and quietly miss the rest.

bit21 derives and scans all four types on import, so the full balance appears no matter how the coins were originally received. You pick the type you want for new addresses, and nothing gets left behind. That is the difference between a wallet built for Bitcoin and one that treats addresses as an afterthought.