
As you navigate the world of Bitcoin, you may come across two types of addresses: Segwit and Legacy. Segwit addresses are designed to be more efficient and scalable, while Legacy addresses are the traditional and more widely used format.
Segwit addresses are typically denoted by a "bc1" prefix, while Legacy addresses start with "1" or "3". This is a crucial distinction, as not all wallets and services support both types of addresses.
If you're using a wallet that only supports Legacy addresses, you won't be able to receive Segwit transactions.
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What is SegWit?
SegWit is a significant improvement over the current bitcoin blockchain, reducing the size needed to store transactions in a block by 65%. This is done by managing the data of a given signature and transferring signatures from the input structure to the final stage of the transaction.
SegWit essentially separates transaction signatures, making it a more efficient and space-saving solution. This is achieved by removing certain signature data and counting serialized witness data as one unit, while core block data is counted as four units.
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SegWit is a soft fork and is backward compatible, meaning it doesn't break existing blockchain functionality. It also utilizes the bech32 format for Native SegWit addresses, which is more efficient and takes up less space in the block.
Here are some key benefits of SegWit:
- Endereços mais recentes, ainda não suportados por todas as carteiras;
- Mais eficiente na identificação e correção de erros em transações;
- Menor em tamanho, ocupando menos espaço no bloco;
- Dados de testemunha são separados, tornando o endereço mais leve e mais econômico;
- Ocupam cerca de 267 vBytes no bloco, menos do que os endereços Legacy.
What is a Bitcoin Address?
A Bitcoin address is a unique identifier that allows you to receive and send Bitcoins. It's like a bank account number, but for Bitcoin.
Bitcoin Legacy addresses, which have been in use since 2009, always start with the number 1 and can consist of 33-34 characters, or sometimes as few as 26. They're a mix of numbers and upper- and lowercase letters.
SegWit addresses, on the other hand, start with either a 3 or bc1q. The number 3 is part of the P2SH addresses that support SegWit, while bc1q marks a Native SegWit address, also known as a P2WPKH address.
SegWit addresses are an improvement upon Legacy addresses, offering benefits like lower transaction fees. They do this by removing the witness part of a transaction from the other data and handling it separately.
Legacy addresses are still supported by Bitcoin wallets, but they're somewhat impractical to use due to updates like SegWit.
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What Is?
SegWit is a game-changer for the Bitcoin blockchain, reducing the size needed to store transactions in a block.
It does this by removing certain signature data, which takes up a lot of space. This is achieved by separating the witness data, which includes transaction signatures, from the rest of the transaction.
SegWit uses the bech32 format for Native SegWit addresses, which is more efficient and takes up less space.
Here are some key benefits of SegWit:
- Endereços mais recentes, ainda não suportados por todas as carteiras;
- Mais eficiente na identificação e correção de erros em transações;
- Menor em tamanho, ocupando menos espaço no bloco;
- Dados de testemunha são separados, tornando o endereço mais leve e mais econômico;
- Ocupam cerca de 267 vBytes no bloco, menos do que os endereços Legacy.
The total digital signatures constitute almost 65% of the total space on the blockchain, making SegWit a crucial upgrade to the Bitcoin network.
SegWit vs Legacy
SegWit addresses are considered an option superior to Legacy addresses, but they're not accepted by all wallets. They're also more recent, not supported by all wallets.
Legacy addresses, on the other hand, are the original Bitcoin address format and are compatible with all wallets. They're larger in size, occupying more space in the block.
Here are the key differences between SegWit and Legacy addresses:
Bitcoin vs. Addresses
Bitcoin addresses come in two main types: Legacy and SegWit.
Legacy addresses are not supported by all wallets, which can cause issues when trying to send money.
SegWit addresses, on the other hand, are more efficient and take up less space in the blockchain.
SegWit addresses are also more lightweight and economical, thanks to their separated witness data.
Legacy addresses, however, occupy more space in the block, taking up around 267 vBytes.
SegWit addresses use the bech32 encoding format and are considered a superior option, but they're not yet universally accepted.
Here's a quick comparison of the two address types:
Transaction fees for spending a SegWit output will likely be lower than spending a legacy output.
Return
If you're considering whether to use SegWit or Legacy for your Bitcoin transactions, it's essential to understand the differences between them.
SegWit outputs have lower transaction fees compared to Legacy outputs. This is a significant advantage, especially for frequent transactions.
Legacy addresses are considered the "standard" type and are used by most users. They're compatible with all Bitcoin wallets and use a base 58 encoding.
SegWit addresses, on the other hand, are larger in size and occupy more space in the block. This can be a drawback for some users.
Legacy addresses typically have a higher average transaction fee compared to SegWit.
Here's a comparison of the two:
Who's the Winner?
SegWit is the clear winner when it comes to speed and scalability, offering faster transaction processing at lower fees.
SegWit's segregated witness address format presents the address in lowercase, making it more readable and easier to detect errors.
With SegWit, you get improved prospects for error detection, which is a major advantage over Legacy.
SegWit's scalability benefits also enable you to detect areas for improvement and identify where the address format can be made more readable.
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Benefits of
Benefits of SegWit include lower transaction fees and faster transactions, allowing users to perform more transactions without increasing the overall size of the Bitcoin blockchain.
Segregated witness addresses enable the separation of signatures from the original transactional data, resulting in a lower transaction fee and better efficiency in transactions.
A user can experience faster transactions and lower fees by using a segregated witness address, which also allows for a higher capacity of blocks.
Segregated witness addresses provide a better scope for efficiency in transactions compared to legacy address formats.
Here are the key benefits of SegWit:
- Lower transaction fees
- Faster transactions
- Higher capacity of blocks
- Improved efficiency in transactions
Segregated witness addresses also fix transaction malleability, an attack that lets a person change a Bitcoin transaction’s unique ID before the transaction is confirmed on the Bitcoin network.
Native Integration
Native Integration is a crucial aspect of the SegWit vs Legacy debate. It emerged as a solution to resolve the issue of network congestion caused by the block size of Bitcoin.
The initial days of Bitcoin saw users limited to Legacy or P2PKH addresses. This was a major constraint, and it wasn't until around 2016 and 2017 that the block size debate gained prominence.
Native SegWit addresses were developed to address the problem of network congestion. As the block size restricted the number of transactions that could be added at a specific time, the network congestion led to longer processing times and delays.
The witness data, also known as SegWit, was the portion of transactions taken to reduce the load on the main chain. This external layer was introduced to alleviate the pressure on the main chain caused by the block size restriction.
The Bitcoin community presented solutions to take a specific share of the transactions and deploy them on this external layer. This was a critical step towards native integration and resolving the issues of network congestion.
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Wallet Support and Compatibility
Legacy addresses are the only type that guarantees compatibility across all available Bitcoin wallets, as they were the default for a relatively long time.
SegWit addresses, on the other hand, are more widely supported than Native SegWit, but you should double-check before committing to a wallet address type for your desired transaction.
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SegWit addresses allow for more efficient identification and correction of errors in transactions, making them a more desirable option.
Native SegWit addresses use the bech32 encoding format and occupy about 267 vBytes in the block, less than Legacy addresses.
Here's a comparison of the two address types:
It's essential to understand that each type of address serves specific needs, and currently, SegWit addresses are considered a superior option, but they're not accepted in all wallets.
Compatibility
Legacy addresses are the oldest type and are supported by all currently available Bitcoin wallets. This is because they were the default for a relatively long time.
You can easily check if your wallet address is Legacy by looking for addresses starting with 1. If it is, you're good to go.
SegWit addresses, on the other hand, are more supported than Native SegWit, but you should double-check before committing to a wallet address type for your desired transaction.
Legacy addresses are not just a thing of the past, they're still widely used and accepted today.
Bitcoin Address Formats
Bitcoin address formats are a crucial aspect of wallet support and compatibility. You can identify Bitcoin addresses by looking at the string of numbers and letters that make up the address.
Bitcoin addresses can be divided into three types: Legacy, SegWit, and Native SegWit. Each type has its own unique characteristics.
Legacy addresses start with the number 1 and can consist of 33-34 characters, but can also have only 26 characters. They're a mix of numbers and upper- and lowercase letters.
SegWit addresses, on the other hand, start with either a 3 or bc1q. The number 3 is part of the P2SH addresses that support SegWit, while bc1q marks a Native SegWit address, also known as a P2WPKH address.
Native SegWit addresses start with bc1q and only use lowercase letters due to the Bech32 encoding scheme.
Here's a quick reference to the different types of Bitcoin addresses and their characteristics:
Understanding these differences is essential for choosing the right wallet and ensuring compatibility with other users.
Transaction Fees and Format
Segregated Witness (SegWit) addresses are designed to be more efficient and cost-effective than Legacy addresses. SegWit addresses start with the number 3 and use lowercase letters, making them easy to identify.
Transaction fees are directly tied to the size of the transaction, measured in bytes. SegWit transactions, being smaller, usually incur lower fees, estimated to be 30-50% lower than Legacy transactions.
Native SegWit addresses, which start with bc1, are the most cost-effective option, with fees lower than both Legacy and SegWit addresses. Many blockchain wallet providers have set their default settings to Native SegWit as the receiving address to take advantage of these lower fees.
Transaction Fees
Transaction fees can be a significant concern for Bitcoin users. They're directly tied to the transaction size, measured in bytes, and can vary depending on the network status.
SegWit transactions, being smaller than Legacy transactions, usually incur lower fees. Uusing SegWit addresses, you might lower your BTC transaction fees by an estimated 30-50%.
The user gets several benefits with SegWit, including lower transaction fees. The fees are lower because they're based on the rate and size of the transaction, which reduces the total effective size.
Native SegWit transactions have a lower overall transaction cost than Legacy transactions when sending Bitcoins from a legacy address. This is why many blockchain wallet providers have set their default settings to Native SegWit as the receiving address.
If you receive Bitcoins previously on the legacy addresses in your wallet, it's likely to remain on the legacy addresses until you send it again. This is because moving the Bitcoin from one wallet to another increases the overall transaction fees.
Format
Legacy Bitcoin addresses start with the number 1, making them easy to tell apart from other types of addresses.
SegWit addresses, on the other hand, start with either a 3 or bc1q, indicating they are less efficient or Native SegWit addresses respectively.

Native SegWit addresses only use lowercase letters due to the bech32 encoding scheme, which is a unique characteristic that sets them apart from other types of addresses.
Segregated witness addresses typically start with the number 3 and consist of 26 to 36 characters, making them easily recognizable.
Native SegWit addresses, by contrast, usually start with bc1, providing a clear visual distinction from other types of addresses.
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Disadvantages and Complications
Segregated witness addresses have several disadvantages that users should be aware of. One of the biggest drawbacks is that it's not completely compatible with old software, which prevents users from getting messages verified in every software.
Miners also struggle to generate great profits due to the lower transaction fees included in segregated witness transactions. This is because the support system includes witness data side chain, hindering the scope for generating fees revenue.
The protocol also fails to fully address the issue of scalability, making it a short-term solution to long-term problems.
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Safety and Security
Segregated witness addresses are a safer option for transactions, separating signatures from transaction data to improve security.
This separation makes it harder for hackers to track transaction signatures, an additional benefit of this option.
Native segregated witness addresses also offer improved safety and security, with a new address format for each transaction.
This new format can be a bit confusing, but it provides enhanced security features for the user.
Complications Involved
Segregated witness addresses come with several complications that users need to be aware of. One of the main issues is that it doesn't allow miners to generate great profits, as the support system includes witness data side chain, which hinders the scope for generating fees revenue.
Miners are usually not able to generate great profits due to a lower transaction fee included in the transactions. This can be a significant drawback for miners who rely on transaction fees for revenue.
The protocol fails to address the issue of scalability, making it a short-term solution to long-term problems. Several Bitcoin miners agree that there are major changes to the Bitcoin blockchain size but how transactions are processed is equally problematic in the long run.
Segregated witness addresses can cause possible divisions in the entire Bitcoin community due to ongoing disagreements surrounding its usage.
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Final Words
As we wrap up our discussion on SegWit vs legacy, it's clear that SegWit presents a set of promising features to the user over its competitor.
SegWit helps in increasing the efficiency of the block side, which is a significant advantage.
Both SegWit and legacy address formats accommodate the volume of transactions in every block, but SegWit takes it a step further with its revolutionary features.
SegWit's comparison with legacy address formats leaves good scope for differentiating between the two, making it easier to understand their respective significances.
The differences in their features represent their journey as a solution for issues with the existing legacy address formats, which is a major breakthrough.
Sources
- https://www.xverse.app/blog/bitcoin-segwit-vs-legacy-addresses
- https://www.blockchain-council.org/cryptocurrency/segwit-vs-native-segwit/
- https://101blockchains.com/segwit-and-native-segwit/
- https://www.linkedin.com/pulse/bitcoin-legacy-vs-segwit-wallet-address-difference-artem-ulko
- https://blog.areabitcoin.com.br/diferenca-entre-legacy-e-segwit/
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