Address (and Address Types)

💡 The Plain-English Definition

A Bitcoin address is a string of letters and numbers that functions like an account number — you give it to someone who wants to send you Bitcoin, and transactions sent to that address can only be spent by whoever holds the corresponding private key. A modern Bitcoin address looks something like this:

bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

🤔 But Why Though?

Bitcoin addresses aren’t arbitrary. They’re derived mathematically from your private key, through a process that’s easy to do in one direction and essentially impossible to reverse. This means anyone can send Bitcoin to your address without knowing your private key — but only you (with the private key) can spend what’s there.

What most people don’t realise is that Bitcoin addresses have evolved significantly over Bitcoin’s lifetime, and the format of an address tells you a lot about the technology behind it.

Legacy addresses (starting with 1…) — the original format, known as P2PKH (Pay-to-Public-Key-Hash — meaning payment is locked to the hash, or fingerprint, of a public key). Still valid, still work, but less efficient and more expensive to transact with.

Script addresses (starting with 3…) — known as P2SH (Pay-to-Script-Hash — meaning payment is locked to the hash of a spending script, which can encode complex conditions like multisig). Introduced to support more complex spending conditions.

Native SegWit addresses (starting with bc1q…) — known as P2WPKH (Pay-to-Witness-Public-Key-Hash), introduced with SegWit (Segregated Witness — a 2017 upgrade that changed how transaction data is stored) in 2017. Smaller transaction sizes mean lower fees. The format most modern wallets default to.

Taproot addresses (starting with bc1p…) — known as P2TR (Pay-to-Taproot), activated in November 2021. The most advanced format: better privacy, lower fees for complex transactions, and the foundation for future upgrades.

🌍 The Real-World Analogy

Think of address types like generations of postal addresses. In the 1800s, you might write “John Smith, the farm on Miller’s Road.” It worked, but it was verbose and sometimes ambiguous. Over time, addresses became standardised — zip codes, postcodes, routing numbers — each generation more efficient and precise than the last. Bitcoin’s address formats follow the same arc: each generation fixes inefficiencies in the previous one, while remaining backward compatible. Old addresses still receive mail. New ones are just better at it.