Why Does BTC Have Different Address Formats?

Why Does BTC Have Different Address Formats?

The variety of Bitcoin address formats stems from ongoing technical upgrades aimed at overcoming early network limitations, such as transaction speed, fees, and scalability. Innovations like SegWit were introduced to improve transaction efficiency and security while supporting additional features. At the same time, compatibility with older address formats was maintained. The evolution of address formats reflects Bitcoin’s continuous adaptation and optimization to meet changing user needs.Common BTC Address Formats and Their Uses

Type	Address Format	Features	Recommended Use
Legacy (P2PKH/P2SH)	Starts with "1"	Original Bitcoin address format, fully functional. Larger transaction size and higher fees compared to newer formats.	Interaction with older wallets or services that don't support SegWit.
Nested SegWit (P2SH-P2WPKH)	Starts with "3"	A compromise between traditional address compatibility and improved efficiency. Smaller transaction size and lower fees than legacy addresses.	For users needing compatibility with older wallets/services but still want some benefits of SegWit.
Native SegWit (P2WPKH)	Starts with "bc1"	Offers the highest transaction efficiency with the smallest transaction size and lowest fees. Includes enhanced security features, reducing network congestion caused by block size limits.	For maximizing efficiency, scalability, and transaction throughput, while minimizing fees and network congestion.

How to Distinguish and Set a Default Receiving Address?

PC Version

Users can go to the Wallet page and click on "Address" in the upper right corner.

Select the cryptocurrency to view the addresses generated by your existing wallet for that cryptocurrency. You can identify which address is your default payment or default receipt address by the labels. There are currently 5 types of labels:

• Default Receipt: This address is the default receipt address.

• Default Payment: This address is the default payment address.

• Regular Address: This address is a regular BTC address.

• SegWit (Compatible): This address format is Segregated Witness (Compatible).

• SegWit (Native): This address format is Segregated Witness (Native).

If you need to add a new address, click the plus icon in the top right corner. You can choose either a SegWit (Compatible) or SegWit (Native) address. After selecting, you can enter an alias for the new address.

To set a default receiving or payment address, hover over the address, click "More," and then select "Set as Default Payment/Receiving Address."

After the setup is complete, the user can also see the format of this address in the receiving section.