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    Author Topic: Why people should be using SegWit addresses  (Read 1631 times)
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    August 21, 2021, 05:18:14 PM
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     #1

    SegWit (https://en.bitcoinwiki.org/wiki/Segregated_Witness) was introduced 4 years ago and a main improvement of SegWit are lower transaction fees for transactions sent from SegWit addresses.

    For Bitcoin addresses, different address formats exist. It is partly visible by having a look at their prefix:

    PrefixCategoryFormat
    _________________________________________________________________________________________________________________ _____________________
    Legacy-AddressP2PKH (pay to public key hash)
    Multisignature-AddressP2SH (pay to script hash)
    _________________________________________________________________________________________________________________ _____________________
    nested SegWit-AddressP2WPKH-P2SH (pay to witness public key hash - pay to script hash) P2WSH-P2SH (pay to witness script hash - pay to script hash)
    _________________________________________________________________________________________________________________ _____________________
    bc1q…native SegWit-Address (bech32)P2WPKH-bech32 (pay to witness public key hash) P2WSH-bech32 (pay to witness script hash)
    bc1p…Taproot-AddressP2TR-bech32m (pay to tap root)



    1… Addresses, starting with 1 are standard Bitcoin-Addresses and are never SegWit.
    3… Addresses, starting with 3 can be SegWit, but can also be Multisignature-Addresses. We can only see if it’s SegWit after we have sent Bitcoins from the address by analyzing the outgoing transaction details.
    bc1… Addresses starting with bc1q (native SegWit) and bc1p (Taproot)… Addresses are always SegWit.


    A simplified explanation how to identify SegWit-Addresses can be found here: BTC addresses starting with "3" what are they ? simplified explanation.




    Native SegWit or nested SegWit?

    After reading the lines above and finding out about the benefits of using SegWit addresses, you may be wondering what the differences are between a native SegWit address (bech32, starts with bc1q...) Taproot Address (bech32m, starts with bc1p) compared to a nested SegWit address (P2WPKH-P2SH P2WSH-P2SH, starts with 3....).
    For us, it is important to know that using a native SegWit Address Taproot-Address will result in even lower fees compared to a nested SegWit address.  

    Savings when sending from a nested SegWit address (3...) compared to a normal legacy address (1...) are 26% +.
    Savings when sending from a native SegWit address (bc1q...) compared to a normal legacy address (1...) are 38% +.
    Depending on the number of inputs to the address, savings are variable, with a higher number of inputs saving even more in percentages.

    Added in November 2022: now, Taproot-Adresses (bc1p...), are also available. In terms of saving fees, Taproot-Addresses are similarly effective as native SegWit Addresses (bc1q…). Savings compared to a normal legacy address (1...) are 38% +.
    A detailed calculation can be found here, provided by Charles-Tim.
    It's because of native SegWit and Taproot are technically very similar, as native SegWit and Taproot are part of the Witness Programm (bech32 bech32m).



    What are the additional advantages of using a SegWit address?

    In addition to lower transaction fees for your transactions, you’ll also help the Bitcoin network by using SegWit addresses, since more transactions will fit into one block. As a result, Bitcoin can process more transactions per second, which benefits all participants.



    Any disadvantages?

    If you have used Bitcoins on some centralized services and now want to send them to your own bech32 SegWit address, it’s possible, that the centralized service won’t recognize your bech32 address and will reject it as invalid. This is because some websites are slow in performing updates and such sites don’t accept this new bech32 address format. However, this only applies to bech32 addresses, but not nested SegWit, which is compatible everywhere and more services will fully support bech32 sooner or later. Just as an information, if you're wondering why you can't send BTC to a bech32 address from some centralized services when it’s getting rejected.

    Here's a list where you can see if different address formats are supported: https://en.bitcoin.it/wiki/Bech32_adoption



    Interesting stats about SegWit

    As with many things around Bitcoin, there are valuable statistics and graphs about SegWit, for example transactionfee.info.

    Among other categories, you can find the share of Bitcoin transactions using SegWit:


    https://transactionfee.info/charts/payments-spending-segwit/
    Currently around 86%.


    And an overview about the percentages of nested SegWit and native SegWit:


    https://transactionfee.info/charts/inputs-types-by-count/
    Note: the total numbers of native SegWit (bech32, purple and dark blue) are relatively low in comparison to nested SegWit (light blue and orange).



    Conclusion

    Choosing a bech32 SegWit address will be the best decision in the long run and has various advantages for you and the Bitcoin network in general. Smiley


    Translations:

    Languagetranslated byTitle
    _______________________________________________________________________________________________________________________
    العربية (Arabic)Nalain420لماذا يجب أن يستخدم الناس عناوين Segwit
    Deutsch (German)1miauVorteile der Verwendung von SegWit Adressen
    French (Français)paid2Pourquoi tout le monde devrait utiliser des adresses Segwit
    Bahasa Indonesia (Indonesian)Husna QAMengapa harus menggunakan alamat SegWit (Segregated Witness)
    Nigeria (Naija)knowngunmanNa why people go dey use SegWit addresses
    Pakistan (Urdu)Publictalk792لوگوں کو سیگوٹ ایڈریسز کیوں استعمال کرنے چ
    Español (Spanish)Porfirii¿Por qué la gente debería usar direcciones SegWit?
    PolskicyganZalety korzystania z adresów SegWit
    Português (Portuguese)gagux123Porque as pessoas deveriam usar endereços SegWit
    Română (Romanian)GazetaBitcoinDe ce oamenii ar trebui să utilizeze adrese SegWit
    PilipinasPeanutswarBakit kailangan gamitin ng mamamayan ang SegWit addresses



    Please note: reserving new translations is not available currently.

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