Bitcoin SegWit vs. Legacy Addresses: A Comparison Guide

You’ve probably heard of SegWit, the update that made the Bitcoin network more efficient. You might not know, however, how it’s impacted Bitcoin addresses and transaction fees. 

In this guide, we’ll give you an overview of what Legacy addresses are and how they differ from SegWit addresses to help you choose which wallet address will work best for you.  

What is a Bitcoin Legacy Address?

A Bitcoin Legacy address is the type of Bitcoin address that has been in use ever since its launch in 2009. 

New updates to Bitcoin (including the SegWit update) have made it somewhat impractical to use for the most part, but Bitcoin wallets still support it as a default state.

Bitcoin Legacy addresses always start with the number 1, making them easy to recognize. Usually, they consist of 33-34 characters, but, in theory, they could also have only 26 of them. In Legacy addresses, they’re a mix of numbers and upper- and lowercase letters.

How Does it Work?

Legacy addresses are the default of Bitcoin: they work exactly like they were first programmed to. 

This type of address is derived from your BTC’s public key. This key and your private key are your main points of access to your BTC: the private key is how you prove the funds are yours, and the public key is the access point to send or receive BTC.

Transactions from Legacy addresses, also known as P2PKH (Pay-to-Public-Key-Hash) addresses, however, still follow the old way of doing things, which means they tend to be bigger and incur higher fees.

What Is a Bitcoin SegWit Address?

A Bitcoin SegWit address exists thanks to the SegWit upgrade to the mainnet. 

SegWit, short for Segregated Witness, is an improvement to Bitcoin that reduces the size necessary for storing transactions in a block, effectively allowing it to process more transactions. “Segregated Witness” means that the witness part of a transaction, which is the transaction signature, is removed from the other data and handled separately, ensuring smaller transaction sizes.

The most visible difference, however, is in address presentation: SegWit addresses start with either a 3 or bc1q. The number 3 is part of the P2SH (Pay-to-Script-Hash) addresses that support SegWit, while bc1q marks a Native SegWit address, also known as a P2WPKH (Pay-to-Witness-Public-Key-Hash) address. 

Although there are differences between the two, both are improvements upon the Legacy address type.

How Does it Work? 

Pay-to-Script-Hash (P2SH) addresses are different from Legacy addresses in that they’re not hashes of public keys. Instead, they’re hashes of a redeem script that has the compressed public key. 

Either way, these addresses, while being introduced even before SegWit, still offer some benefits of this upgrade, helping to lower transaction fees compared to Legacy addresses.

Native SegWit, or P2WPKH addresses (also known as Bech32 addresses, which is an encoding scheme), implement the SegWit functionalities pretty literally: Signatures and public keys data are moved to the so-called Witness, which is a new part of SegWit transactions, ensuring the smaller size of the transaction, and, subsequently, even lower fees.

Bitcoin Legacy vs. SegWit Addresses: What’s the Difference? 

There are four main differences that help tell these address types apart but also decide which one to use. Here, we offer an overview of them.

Format 

The most obvious difference is in the way these addresses start.

Bitcoin Legacy addresses start with the number 1. Less efficient SegWit addresses start with a 3, while Native SegWit addresses start with bc1q. This makes them all very simple to tell apart only by looking at them, without the need to check anything else. Additionally, Native SegWit addresses only use lowercase letters due to the bech32 encoding scheme.

Size 

Out of the three types, the biggest transaction size is associated with Legacy addresses. This is because all the transaction data is bundled, meaning more block space is needed.

SegWit allows for the separation of the script and signature data, so both of these address types are smaller than Legacy. However, Native SegWit transactions are even smaller compared to also SegWit-supporting P2SH addresses.

Transaction Fees

Transaction fees are directly tied to the BTC transaction size, measured also in bytes. While fees also depend on the current 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%.

Compatibility 

The only compatibility guarantee you can get is for Legacy addresses. Since they’re the oldest type that used to be the default for a relatively long time, all currently available Bitcoin wallets support Legacy addresses.

Meanwhile, SegWit addresses are more supported than Native SegWit. For this reason, you must double-check before committing to a wallet address type for your desired transaction.

Download Xverse to Manage Your Bitcoin Assets

The Xverse Bitcoin wallet supports all SegWit addresses, making your on-chain BTC transactions as cheap and fast as possible. Additionally, Xverse also supports Taproot wallet addresses to allow you to store all your favorite Bitcoin-native assets, like Ordinals and Runes, in a single wallet. 

Download Xverse today to start managing all your Bitcoin assets in one place. 

FAQs

Is it better to use SegWit or Legacy?

Although Legacy has been around for the longest time, SegWit offers lower transaction fees and sometimes faster transaction times. The improvements that SegWit brings are significant and a growing number of wallets now support this address type, so you rarely have a reason to still opt for Legacy.

Can I send bitcoin from Legacy to SegWit?

Yes, the two address types are compatible. You can send any amount of BTC from your Legacy wallet to your new SegWit wallet without worry.

How do I know if my BTC address is SegWit?

The easiest way to tell if your BTC address is SegWit is by looking at its first character(s). Legacy addresses start with the number 1, while SegWit addresses will start with either 3 or bc1q. If your address starts with bc1q, congratulations! Your address is the most efficient SegWit type, also known as Native SegWit.