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What is a Native SegWit Address?

General Wallet Use

15 min

A Bitcoin address is a unique identifier consisting of 34-62 alphanumeric characters and is primarily used as a secure and virtual location for users to send and receive bitcoin. Many different types of Bitcoin addresses exist, and their variety is thanks to several developments that occurred on the Bitcoin blockchain in recent years.


Segregated Witness (SegWit), for example, was one of these important developments to Bitcoin as it gave way to the creation of SegWit addresses. However, while SegWit resolved several long-standing issues, it didn’t entirely address a lot of concerns that Bitcoin users still had about their transactions.


Native SegWit addresses were eventually introduced. This Learn Center piece will explore what Native SegWit addresses are and why they were created.

What is SegWit? How Did it Give Way to Different Bitcoin Addresses?


SegWit was an important update to the Bitcoin system that was introduced in August 2017. It was designed to accomplish two specific goals: eliminate transaction malleability and increase the transaction capacity to raise Bitcoin block size.


SegWit was able to accomplish these goals by separating the signature data (the Witness) from the transaction data and moving it to a different section of the blockchain. Before SegWit, both signature and transaction data were traditionally combined when calculating Transaction ID (txid), which significantly reduced the number of transactions that could be conducted as combining both forms of data took up a substantial amount of space within a block.


This practice also made transaction malleability an issue because by combining signature and transaction data, the Transaction ID could suddenly change even after a transaction had been confirmed, so long as the digital signature is not invalidated. This was a bi led to a series of problems for users who are trying to send or receive bitcoin built on the Transaction ID of a previous transaction affected by transaction malleability. Thankfully, SegWit’s ability to separate signature and transaction data both fixed transaction malleability and increased the block size by changing the limit of transactions from 1MB to 4MB, which thereby decreased transaction fees since more of them could be made within a single block.

The Result of SegWit: SegWit Addresses


The changes and upgrades that SegWit brought eventually led to the creation of SegWit addresses, which in many ways acted as an upgrade to legacy addresses, the format that Bitcoin users had been familiar with up until then. One way that these two address types differ is in appearance as legacy addresses always start with the number “1”.


Additionally, because SegWit is optimized in a way that allows for more transactions to occur, the other and more important distinction is that SegWit addresses boast smaller transaction sizes, a larger network capacity, and smaller transaction fees compared to legacy addresses. However, despite the significant improvements SegWit addresses brought, there was always room for improvement. This eventually led to the creation of Native SegWit addresses.

What are Native SegWit Addresses?


Native SegWit addresses, also known as Bech32 addresses and start with “bc1”, were created as an improvement upon the original SegWit addresses as they cut down on even more transaction weight.


This is beneficial because it means Native SegWit addresses can offer advantages that legacy SegWit addresses could not. This includes providing even smaller transaction sizes, which was done by directly using the SegWit structure and made an additional hash operation no longer necessary. Having smaller transaction sizes also made Native SegWit addresses more space-efficient and allowed them to offer even lower transaction fees than legacy SegWit addresses could offer.


Native SegWit addresses also offer other upgrades that make them more reliable and user-friendly than SegWit addresses such as an improved, built-in QR code efficiency error detection and having its addresses be case-insensitive. Additionally, Native SegWit addresses offer other features like improved security and forward compatibility to future updates to the Bitcoin system.


However, Native SegWit addresses are still not universally accepted by all Bitcoin wallets as many do not have the necessary infrastructure to accept these newer formats. Legacy SegWit addresses, meanwhile, are accepted by most, if not all Bitcoin wallets. Ultimately, Bitcoin users have always strived to help Bitcoin scale and a lot of the motivation behind the development of Native SegWit addresses is based on that desire.

Conclusion


Overall, these are all the vital points you need to know about Native SegWit addresses. While much of their history stems from SegWit as Native SegWit addresses were optimized to be an improvement on legacy SegWit addresses, Native SegWit addresses have quickly become a popular address format thanks to its many advantages and upgrades.


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