Bitcoin (BTC) is more than just a digital currency — it's an evolving ecosystem. As the network has grown, so too have the technologies that support it. One of the most practical changes for users is the introduction of three distinct BTC address formats: Native SegWit, Nested SegWit, and Legacy. While they all serve the same purpose — receiving and sending BTC — each comes with different benefits in terms of fees, speed, and compatibility.
In this comprehensive guide, we’ll break down the differences between these address types, help you understand which one best fits your needs, and show you how to manage them using a hardware wallet like Keystone — all while keeping your funds secure and transactions efficient.
Why Are There Three Types of BTC Addresses?
Bitcoin was launched in 2009 with a single address format — what we now call Legacy. Over time, as transaction volume increased, network congestion and high fees became major concerns. To solve these issues, developers introduced Segregated Witness (SegWit) in 2017, a protocol upgrade that restructured how transaction data is stored.
This innovation led to two new address formats designed to improve efficiency: Nested SegWit and Native SegWit. The result? Smaller transaction sizes, lower fees, and better scalability — all without compromising security.
So today, the three address types exist due to evolutionary progress, offering users flexibility based on their technical needs and compatibility requirements.
Understanding the Three BTC Address Formats
Let’s explore each BTC address type in detail, including format, features, and ideal use cases.
1. Legacy (P2PKH / P2SH)
- Format: Begins with
1(e.g.,1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa) Features:
- The original Bitcoin address format.
- Fully functional but less efficient.
- Larger transaction size = higher network fees.
- No SegWit support.
- Best For:
Interfacing with older wallets or services that haven’t upgraded to support SegWit.
👉 Discover how modern wallets optimize Bitcoin transactions with advanced address formats.
While Legacy addresses still work, they’re increasingly outdated. If you're using one, you're likely paying 20–40% more in fees compared to SegWit alternatives.
2. Nested SegWit (P2SH-P2WPKH)
- Format: Begins with
3(e.g.,3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy) Features:
- A hybrid solution that wraps a SegWit address inside a traditional P2SH structure.
- Offers moderate fee savings (around 15–25% lower than Legacy).
- Backward compatible with older systems.
- Slightly more complex to process.
- Best For:
Users who need to interact with both modern and outdated platforms but want some cost efficiency.
This format acts as a transition bridge, allowing services to adopt SegWit gradually without breaking compatibility.
3. Native SegWit (P2WPKH)
- Format: Begins with
bc1(e.g.,bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq) Features:
- Fully optimized for SegWit.
- Smallest transaction size = lowest possible fees.
- Enhanced security and malleability fixes.
- Not supported by very old wallets.
- Best For:
Most users today — especially those prioritizing low fees and fast confirmations.
✅ Pro Tip: If your wallet supports bc1 addresses, use them. You’ll save money on every transaction and future-proof your usage.How to Switch BTC Address Formats on a Keystone Hardware Wallet
Using a hardware wallet like Keystone gives you full control over your private keys and enhances security. Here’s how to choose your preferred BTC address format:
Step 1: Access BTC Settings
- Power on your Keystone device.
- From the home screen, navigate to [BTC].
- Tap [Address Setting].
You’ll now see the three available address types:
- Legacy (
1...) - Nested SegWit (
3...) - Native SegWit (
bc1...)
Step 2: Select Your Preferred Format
- Choose the address type that aligns with your needs.
- Confirm your selection.
- Press the [<] button to return to the main screen.
The receiving address displayed will now reflect your chosen format.
🔐 Security Note: Always verify the address on your hardware wallet screen before sharing it — never trust software-only displays.
Connecting BlueWallet to Keystone: Managing Addresses Seamlessly
Want to manage your BTC from your phone while keeping keys offline? BlueWallet (a popular software wallet) can connect to Keystone via QR codes for secure, air-gapped signing.
Step 1: Initiate Connection
- On your Keystone, go to the main menu (tap
[...]). - Select [Connect Software Wallet].
- Choose [BlueWallet] — a QR code will appear.
Step 2: Pair with BlueWallet App
- Open the BlueWallet app on your smartphone.
- Go to Wallets > Add Wallet > Connect Hardware Wallet.
- Scan the QR code shown on your Keystone.
Your wallet is now linked! BlueWallet will display balances and let you create transactions signed securely by your Keystone.
Step 3: Change Address Format When Rebinding
If you later decide to switch address types:
- Reconnect BlueWallet by repeating the pairing process.
During setup, you’ll be prompted to select an address path — this is where you choose:
- Legacy
- Nested SegWit
- Native SegWit
Your new transactions will use the updated format.
👉 Learn how top wallets streamline Bitcoin management with SegWit integration.
Frequently Asked Questions (FAQ)
Q1: Can I receive BTC in any address format?
Yes. All three address types can receive Bitcoin safely. However, sending to a Legacy address may result in higher fees when you spend those funds later due to larger input size.
Q2: Will I lose funds if I switch address formats?
No. Switching formats doesn’t affect existing funds. Your private key controls access across all formats (same seed phrase). You’re simply changing how new receiving addresses are generated.
Q3: Is Native SegWit safe?
Absolutely. Native SegWit is not only safe — it’s more secure than Legacy due to improved transaction malleability protection and better script enforcement.
Q4: Why do some exchanges only accept Legacy or Nested SegWit?
Older platforms may not yet support bc1 addresses due to technical limitations or slow upgrades. Always check deposit guidelines before sending funds.
Q5: Do all wallets support Native SegWit?
Most modern wallets do — including Electrum, Trezor, Ledger, Keystone, and BlueWallet. But some older or lightweight wallets may only support Legacy or Nested formats.
Q6: Which BTC address format saves the most on fees?
Native SegWit (P2WPKH) offers the greatest fee savings — typically 25–40% lower than Legacy addresses — because it reduces transaction data size significantly.
Final Recommendation: Use Native SegWit When Possible
For most users in 2025, Native SegWit (bc1) is the clear winner. It delivers:
- Lower transaction fees
- Faster confirmation times
- Improved network scalability
- Stronger security
Only fall back to Nested SegWit (3) or Legacy (1) when dealing with outdated systems that don’t recognize bc1 addresses.
By understanding these formats and managing them through secure tools like Keystone and BlueWallet, you take full advantage of Bitcoin’s latest advancements — keeping costs down and control in your hands.
👉 See how leading platforms optimize Bitcoin transactions with next-gen address technology.
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Bitcoin address types, Native SegWit, Nested SegWit, Legacy address, BTC transaction fees, SegWit adoption, hardware wallet security, P2WPKH vs P2SH