Bitcoin Address Types

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1. Legacy

• Legacy transactions, also known as Pay-to-Public-Key-Hash (P2PKH), represent the original and most common address format.
• Addresses in this format start with the number "1."
• Legacy transactions are less space-efficient and can lead to higher transaction fees due to their larger size.

Example Legacy Address: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa

2. Nested SegWit (P2SH-P2WPKH)

• Nested SegWit, or Pay-to-Witness-Public-Key-Hash (P2SH-P2WPKH), is an interim solution that combines features of both Legacy and Native SegWit.
• Addresses in this format start with the number "3."
• It allows Legacy wallets to send funds to SegWit addresses while still benefiting from lower fees.

Example Nested SegWit Address: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy

3. Native SegWit (bech32)

• Native SegWit, or bech32, represents an improvement over Legacy transactions in terms of scalability and reduced transaction fees.
• Addresses in this format start with "bc1."
• Native SegWit uses a more efficient scripting language (Segregated Witness) to reduce transaction size.

Example Native SegWit Address: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

4. Taproot

• Taproot is the latest Bitcoin address format designed to enhance privacy, scalability, and scripting capabilities. Addresses in this format start with "bc1p."
• Taproot allows the aggregation of multiple signatures, making complex transactions more efficient and cost-effective.

Example Taproot Address: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

Type	Script Type	Derivation	BIP
Native Segwit	P2WPKH	m/84'/0'/0'	bip-0084
Nested Segwit	P2SH-P2WPKH	m/49'/0'/0'	bip-0141
Taproot	P2TR	m/86'/0'/0'	bip-0341
Legacy	P2PKH	m/44'/0'/0'