Address (and Address Types)

💡 The Plain-English Definition

A Bitcoin address is a string of letters and numbers that works like an account number. You give it to someone who wants to send you bitcoin, and whatever is sent to that address can only be spent by whoever holds the matching private key — the secret number that controls it. 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 run in one direction and essentially impossible to reverse. So anyone can send bitcoin to your address without knowing your private key — but only you, holding that key, can spend what’s there.

What most people don’t realise is that Bitcoin addresses have changed a lot over Bitcoin’s lifetime. The format of an address actually tells you a fair amount about the technology behind it.

Legacy addresses (starting with 1…) are the original format, known as P2PKH, short for Pay-to-Public-Key-Hash. That means the payment is locked to the hash — the fingerprint — of a public key. They still work, but they’re less efficient and cost more to spend from.

Script addresses (starting with 3…) are known as P2SH, short for Pay-to-Script-Hash. Here the payment is locked to the hash of a spending script — a small program that can set more complex conditions, such as requiring several keys to sign (multisig). This format was introduced to support exactly those richer conditions.

Native SegWit addresses (starting with bc1q…) are known as P2WPKH. They arrived with SegWit — Segregated Witness, a 2017 upgrade that changed how transaction data is stored. They make transactions smaller, which means lower fees, and they’re the format most modern wallets use by default.

Taproot addresses (starting with bc1p…) are known as P2TR, short for Pay-to-Taproot, activated in November 2021. It’s the most advanced format: better privacy, lower fees on 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 wordy 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 one before, while still accepting the old formats. Old addresses still receive mail. New ones are just better at it.