The true option for lower fee option is the use of lightning network, but I am wondering why big exchanges like Binance and Coinbase are not yet supporting it when there are many exchanges that accept bitcoin lightning payment.
Because they don't care. It took them years to implement support for native segwit addresses, which is trivial to do, easily compatible with all their existing infrastructure, and completely safe. It will take them even longer I'm sure to implement Lightning support, given that it requires them to set up brand new infrastructure and still has a number of bugs and issues being worked on. And it affects their profits. Remember that Binance charge an insane amount of bitcoin withdrawals in order to entice newbies who don't understand any better to buy their centralized scam tokens instead. If you can withdraw for free via Lightning, then they lose their insane withdrawals fees and they lose a large amount of volume on their scam chains. 
Topic: Why people should be using SegWit addresses - page 3. (Read 1595 times)
im also using segwit address when send from trust wallet to BInance because lower fee I think is same with ethereum although the other chain-like bnb or polygon give more less fee. segwit still great for daily transaction and I think more and more exchange will accept it
Yes, segwit fee is cheap, the last transaction I made which was few days ago was though from native segwit (segwit) to nexted segwit with high fee priority of 1 sat/vbyte when I checked mempool, it was a 1 input and 1 output transaction with 111 sat that was deducted, that amounts to $0.03 at bitcoin price of $19300.Never mind this is not related to this thread. Trustwallet wallet is close source, the reason I do not use it anymore for bitcoin, I do not even think it has address change, is the Trustwallet address changing after making successful transaction? Because I did not see any address change on the wallet when I downloaded the wallet recently for testing.
Bitcoin on BNB chain which is BS and also BSC that have ethereum address, or any other chain like ERC20 (like wBTC) are not actually bitcoin but altcoins pegged with bitcoin. Binance is really misleading its users by making these chains available on bitcoin withdrawal page on the exchange.
The true option for lower fee option is the use of lightning network, but I am wondering why big exchanges like Binance and Coinbase are not yet supporting it when there are many exchanges that accept bitcoin lightning payment.
Bump!
I've updated the pictures where the usage of SegWit rose from 70% in August 2021 to 86% right now (July 2022):
NEW (7/2022)
https://transactionfee.info/charts/payments-spending-segwit/
NEW (7/2022)
https://transactionfee.info/charts/inputs-types-by-count/
OLD (8/2021)
https://transactionfee.info/charts/payments-spending-segwit/
Currently around 86%.
https://transactionfee.info/charts/inputs-types-by-count/
I've updated the pictures where the usage of SegWit rose from 70% in August 2021 to 86% right now (July 2022):
NEW (7/2022)
https://transactionfee.info/charts/payments-spending-segwit/
NEW (7/2022)
https://transactionfee.info/charts/inputs-types-by-count/
OLD (8/2021)
https://transactionfee.info/charts/payments-spending-segwit/
Currently around 86%.
https://transactionfee.info/charts/inputs-types-by-count/
My point is that maybe we should somehow "pressure" the services into SegWit, instead of teaching over and over again the individuals...
I don't know how though.
We need competition in the market so that the incentive forces them to up their game.I don't know how though.
For example imagine if two companies were running the same business in competition (like 2 bitcoin exchanges), one has implemented SegWit and the other hasn't. If people move to the one that has the other one will start losing business and money so they have a choice of either going bankrupt and close down shop or improving their service.
Otherwise we can't force people to boycott any services or the service to get of their lazy fannies if the only option is that one service or a handful that all do the same. Take Binance for example, that is basically the only CEX for altcoin trading around with others either being scams or too tiny. So when it forces unfair rules on its users such as mandatory KYC for everyone, people have no choice but to accept until a new CEX comes along and replace it just like Binance replaced Bittrex a couple of years ago and Bittrex replaced Poloniex and that replaced Cryptsy and so on.
a main improvement of SegWit are lower transaction fees for transactions sent from SegWit addresses.
Indeed, people will think to their pockets first. But I think that a big bunch of the people still not using SegWit addresses is because they use for long time various web wallets which didn't care to teach (or force?) them upgrade.
And then we get back to this:
Quote
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.
After 5 years it is no longer considered "slow" it is either malice or incompetence. My point is that maybe we should somehow "pressure" the services into SegWit, instead of teaching over and over again the individuals...
I don't know how though.
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.
The percentage of fee reduction depends on number of outputs as well. With higher number of outputs, the percentage of fee reduction decreases. 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.
Your table is a weird categorization of addresses. Basically addresses starting with both 1 or 3 are legacy addresses. Also referring to those starting with 3 as "multi-signature addresses" is a bit misleading because those are P2SH (Pay to Script Hash) addresses and that's all we know. The "script" that was hashed can be anything from legacy scripts including multi-sig scripts, time-lock scripts, or any other complex smart contracts or witness programs of any version although only version 0 (P2WPKH and P2WSH) are standard.
I've tried to use "common" names here, how such adress types are often referred that people can recognize it, even if there are some overlaps. If you know more common expressions, I can add them. 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.
After 5 years it is no longer considered "slow" it is either malice or incompetence. 
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.
You can follow adoption of different address formats including bech32 for wallets, exchanges, explorers and other services in this wiki page:https://en.bitcoin.it/wiki/Bech32_adoption
With higher number of outputs, the percentage of fee reduction decreases.
Obviously the bulk of the savings comes from spending segwit inputs over spending legacy inputs, with segwit and legacy outputs only differing by about 3 vbytes, as opposed to segwit and legacy inputs which differ by about 80 vbytes. Very few average users are making transactions with more than a handful of outputs, though, and so segwit is still the obvious choice.This effect will be much more noticeable with taproot transactions. Taproot inputs are even smaller than segwit inputs, but a taproot output is larger than both legacy and segwit outputs. Even a 1-input-2-output taproot transaction is larger (in terms of vbytes) than a similar segwit transaction, and once you get up to 10 or more outputs, then it becomes larger than a similar legacy transaction too. It will be a long time before taproot is so widespread that people are paying to 10+ different taproot outputs in the same transaction, though.
I don't understand why exchanges are so slow in fully adopting native segwit addresses, for example if I am not mistaken, only Binance, Bitstamp, Kucoin, Kraken and maybe few more exchanges are offering customers to have account with bech32 bc1 receiving address.
I would also add that upcoming Taproot fork will add new form of P2TR addresses with updated form Bech32m that will add more privacy especially when using multisig.
https://en.bitcoin.it/wiki/Bech32_adoption
I would also add that upcoming Taproot fork will add new form of P2TR addresses with updated form Bech32m that will add more privacy especially when using multisig.
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.
You can follow adoption of different address formats including bech32 for wallets, exchanges, explorers and other services in this wiki page:https://en.bitcoin.it/wiki/Bech32_adoption
Your table is a weird categorization of addresses. Basically addresses starting with both 1 or 3 are legacy addresses. Also referring to those starting with 3 as "multi-signature addresses" is a bit misleading because those are P2SH (Pay to Script Hash) addresses and that's all we know. The "script" that was hashed can be anything from legacy scripts including multi-sig scripts, time-lock scripts, or any other complex smart contracts or witness programs of any version although only version 0 (P2WPKH and P2WSH) are standard.
Also Bech32 prefix for mainnet is technically "bc" and "1" is the separator and "q" is the witness version (0 here).
Technically it is faster to verify a SegWit transaction, specially if they have more than one input and the transaction size is big (hashes can be cashed and reused).
Also Bech32 prefix for mainnet is technically "bc" and "1" is the separator and "q" is the witness version (0 here).
Quote
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.
After 5 years it is no longer considered "slow" it is either malice or incompetence. Quote
What are the additional advantages of using a SegWit address?
Additionally:Technically it is faster to verify a SegWit transaction, specially if they have more than one input and the transaction size is big (hashes can be cashed and reused).
To further clarify the usefulness of using a segwit account, here is an interesting article/guide for beginners that talks more on what segwit acount is, and why use segwit account, we can find it interesting in the Cryptocurrency journey as some campaign managers from this forum may request for such, let's check on other goodness segwit offers below:
https://www.google.com/amp/s/academy.binance.com/en/articles/a-beginners-guide-to-segretated-witness-segwit.amp
Quote
What is SegWit?
Segregated Witness (SegWit) is a protocol upgrade developed in 2015. The concept was introduced as a solution to the scalability problem that blockchain networks were and are still facing today.
On average, the Bitcoin network validates a new block every 10 minutes, each containing several transactions. As such, the block size affects the number of transactions that can be confirmed in each block. Currently, the Bitcoin blockchain can process around 7 transactions per second.
SegWit’s main idea is to reorganize block data so that signatures are no longer placed along with transaction data. In other words, the SegWit upgrade consists of segregating the witnesses (signatures) from transaction data. This allows for more transactions to be stored in a single block, increasing the transaction throughput of the network.
By only being able to process about 7 transactions per second, a Bitcoin transaction can sometimes take a long time to go through. That's a lot slower when compared to conventional payment solutions and financial networks, which can process thousands of transactions per second.
SegWit was developed in 2015 by Bitcoin developer Pieter Wuille, along with other Bitcoin Core contributors. In August 2017, the SegWit upgrade was implemented as a soft fork on the Bitcoin network.
Today, several cryptocurrency projects are using SegWit, including Bitcoin and Litecoin. The protocol upgrade brought up many benefits, such as improved transaction speed and block capacity. Also, SegWit solved the so-called transaction malleability bug (discussed below).
What are the main benefits of SegWit?
Capacity increase
One of the biggest benefits of SegWit is the increase in block capacity. By removing the signature data from the transaction input, more transactions can be stored within a single block.
Transactions consist of two main components: inputs and outputs. Essentially, an input contains the sender's public address, while the output contains the public address of the recipient. However, the sender must prove that they have the funds being transferred, and they do so with a digital signature.
Without SegWit, the signature data can take up to 65% of a block. With SegWit, the signature data is moved away from the transaction's input. This causes the effective block size to increase from 1 MB to about 4 MB.
Note that SegWit is not an actual block size increase. Instead, it is an engineering solution to increase the effective block size without having to increase the block size limit (which would require a hard fork). To be more specific, the actual block size is still 1 MB, but the effective block size limit is 4 MB.
Also, SegWit introduced the idea of block weight. We may consider block weight as a concept that replaces the idea of block size. Essentially, block weight is a measure that includes all block data, including transaction data (1 MB) and the signature data (up to 3 MB), which is no longer part of the input field.
Transaction speed increase
With a block that can store more transactions, SegWit also has the ability to increase transaction speed, since there can be a larger amount of transactions moving through the blockchain. Even though a block may take the same amount of time to mine, more transactions are being processed in it, so the TPS rate is higher.
Increased transaction speed has also helped reduce transaction costs in the Bitcoin network. Before SegWit, it wasn't uncommon to spend over $30 per transaction. However, SegWit has dropped that cost dramatically to less than $1 per transaction.
Transaction malleability fix
A major issue with Bitcoin was the ability to potentially tamper with transaction signatures. If a signature is altered, it could result in a transaction between two parties being corrupte :-Xd. Since the data stored on blockchains are virtually immutable, invalid transactions could be permanently stored on the blockchain.
With SegWit, signatures are no longer a part of the transaction data, which removes the possibility of altering this data. This fix has allowed further innovation within the blockchain community, including second-layer protocols and smart contracts.
SegWit and the Lightning Network
The development of second-layer protocols was partially enabled by fixing the transaction malleability bug. Simply put, second-layer protocols are new platforms or products that are built on top of a blockchain, such as Bitcoin. One of the more popular second-layer protocols is the Lightning Network, an off-chain micropayment network.
The Lightning Network is a second-layer protocol that operates on top of the Bitcoin network. The Lightning Network's main purpose is to allow more transactions to be confirmed in a shorter amount of time, resulting in faster transactions for users. Transactions are collected off-chain and effectively buffered for the Bitcoin network to eventually process.
The Lightning Network was originally developed for Bitcoin. However, several other cryptocurrency and blockchain projects are working on implementing the technology for their networks. This will not only reduce the confirmation time transactions but also foster the development of new solutions to the scalability problem.
SegWit vs. SegWit2x
SegWit is a soft fork upgrade, meaning that it is backward-compatible. In other words, Bitcoin nodes that are not updated to include SegWit are still able to process transactions. However, there was another proposed SegWit implementation called SegWit2x (S2X), which would require a hard fork upgrade.
The key difference between SegWit and SegWit2x is that the latter would have not just included a change in transaction batching, but also an increase in the block size (from 1MB to 2MB). Still, a larger block size would increase the burden on node operators and miners, as there would be more data to be handled.
Another notable difference is that the SegWit proposal was supported and enforced by the Bitcoin community. The episode gave birth to the concept of UASF, which stands for user-activated soft fork.
On the other hand, the SegWit2x proposed a substantial change to one of the fundamental rules governing Bitcoin. But since developers were unable to come to a consensus on its adoption and implementation, the SegWit2x movement was ultimately suspended.
Nested SegWit vs. Native SegWit (bech32)
In short, Native SegWit (also known as bech32) is an updated version of the Nested SegWit. The bech32 format offers increased transaction speed, better error-detection mechanisms, and even lower transaction fees. Also, bech32 addresses are lowercase, making them easier to read.
Note that blockchain transactions between non-SegWit (Legacy), Nested SegWit, and Native SegWit (bech32) addresses are fully compatible. However, not all exchanges and crypto wallets support SegWit, so you might not be able to withdraw funds directly to a SegWit address.
Closing Thoughts
The implementation of SegWit marked the biggest protocol upgrade of Bitcoin, and the fact that it was supported and implemented by the decentralized community makes it even more interesting.
The introduction of SegWit was a major step forward in solving many problems related to Bitcoin and other blockchain networks - especially in regards to scalability. Through the combination of SegWit and the second-layer protocols, blockchain networks can handle a larger number of transactions, with more efficiency and lower costs.
Despite being a powerful and innovative solution, SegWit is yet to be fully adopted. Currently, the percentage of Bitcoin addresses using SegWit is around 53%.
Source link:Segregated Witness (SegWit) is a protocol upgrade developed in 2015. The concept was introduced as a solution to the scalability problem that blockchain networks were and are still facing today.
On average, the Bitcoin network validates a new block every 10 minutes, each containing several transactions. As such, the block size affects the number of transactions that can be confirmed in each block. Currently, the Bitcoin blockchain can process around 7 transactions per second.
SegWit’s main idea is to reorganize block data so that signatures are no longer placed along with transaction data. In other words, the SegWit upgrade consists of segregating the witnesses (signatures) from transaction data. This allows for more transactions to be stored in a single block, increasing the transaction throughput of the network.
By only being able to process about 7 transactions per second, a Bitcoin transaction can sometimes take a long time to go through. That's a lot slower when compared to conventional payment solutions and financial networks, which can process thousands of transactions per second.
SegWit was developed in 2015 by Bitcoin developer Pieter Wuille, along with other Bitcoin Core contributors. In August 2017, the SegWit upgrade was implemented as a soft fork on the Bitcoin network.
Today, several cryptocurrency projects are using SegWit, including Bitcoin and Litecoin. The protocol upgrade brought up many benefits, such as improved transaction speed and block capacity. Also, SegWit solved the so-called transaction malleability bug (discussed below).
What are the main benefits of SegWit?
Capacity increase
One of the biggest benefits of SegWit is the increase in block capacity. By removing the signature data from the transaction input, more transactions can be stored within a single block.
Transactions consist of two main components: inputs and outputs. Essentially, an input contains the sender's public address, while the output contains the public address of the recipient. However, the sender must prove that they have the funds being transferred, and they do so with a digital signature.
Without SegWit, the signature data can take up to 65% of a block. With SegWit, the signature data is moved away from the transaction's input. This causes the effective block size to increase from 1 MB to about 4 MB.
Note that SegWit is not an actual block size increase. Instead, it is an engineering solution to increase the effective block size without having to increase the block size limit (which would require a hard fork). To be more specific, the actual block size is still 1 MB, but the effective block size limit is 4 MB.
Also, SegWit introduced the idea of block weight. We may consider block weight as a concept that replaces the idea of block size. Essentially, block weight is a measure that includes all block data, including transaction data (1 MB) and the signature data (up to 3 MB), which is no longer part of the input field.
Transaction speed increase
With a block that can store more transactions, SegWit also has the ability to increase transaction speed, since there can be a larger amount of transactions moving through the blockchain. Even though a block may take the same amount of time to mine, more transactions are being processed in it, so the TPS rate is higher.
Increased transaction speed has also helped reduce transaction costs in the Bitcoin network. Before SegWit, it wasn't uncommon to spend over $30 per transaction. However, SegWit has dropped that cost dramatically to less than $1 per transaction.
Transaction malleability fix
A major issue with Bitcoin was the ability to potentially tamper with transaction signatures. If a signature is altered, it could result in a transaction between two parties being corrupte :-Xd. Since the data stored on blockchains are virtually immutable, invalid transactions could be permanently stored on the blockchain.
With SegWit, signatures are no longer a part of the transaction data, which removes the possibility of altering this data. This fix has allowed further innovation within the blockchain community, including second-layer protocols and smart contracts.
SegWit and the Lightning Network
The development of second-layer protocols was partially enabled by fixing the transaction malleability bug. Simply put, second-layer protocols are new platforms or products that are built on top of a blockchain, such as Bitcoin. One of the more popular second-layer protocols is the Lightning Network, an off-chain micropayment network.
The Lightning Network is a second-layer protocol that operates on top of the Bitcoin network. The Lightning Network's main purpose is to allow more transactions to be confirmed in a shorter amount of time, resulting in faster transactions for users. Transactions are collected off-chain and effectively buffered for the Bitcoin network to eventually process.
The Lightning Network was originally developed for Bitcoin. However, several other cryptocurrency and blockchain projects are working on implementing the technology for their networks. This will not only reduce the confirmation time transactions but also foster the development of new solutions to the scalability problem.
SegWit vs. SegWit2x
SegWit is a soft fork upgrade, meaning that it is backward-compatible. In other words, Bitcoin nodes that are not updated to include SegWit are still able to process transactions. However, there was another proposed SegWit implementation called SegWit2x (S2X), which would require a hard fork upgrade.
The key difference between SegWit and SegWit2x is that the latter would have not just included a change in transaction batching, but also an increase in the block size (from 1MB to 2MB). Still, a larger block size would increase the burden on node operators and miners, as there would be more data to be handled.
Another notable difference is that the SegWit proposal was supported and enforced by the Bitcoin community. The episode gave birth to the concept of UASF, which stands for user-activated soft fork.
On the other hand, the SegWit2x proposed a substantial change to one of the fundamental rules governing Bitcoin. But since developers were unable to come to a consensus on its adoption and implementation, the SegWit2x movement was ultimately suspended.
Nested SegWit vs. Native SegWit (bech32)
In short, Native SegWit (also known as bech32) is an updated version of the Nested SegWit. The bech32 format offers increased transaction speed, better error-detection mechanisms, and even lower transaction fees. Also, bech32 addresses are lowercase, making them easier to read.
Note that blockchain transactions between non-SegWit (Legacy), Nested SegWit, and Native SegWit (bech32) addresses are fully compatible. However, not all exchanges and crypto wallets support SegWit, so you might not be able to withdraw funds directly to a SegWit address.
Closing Thoughts
The implementation of SegWit marked the biggest protocol upgrade of Bitcoin, and the fact that it was supported and implemented by the decentralized community makes it even more interesting.
The introduction of SegWit was a major step forward in solving many problems related to Bitcoin and other blockchain networks - especially in regards to scalability. Through the combination of SegWit and the second-layer protocols, blockchain networks can handle a larger number of transactions, with more efficiency and lower costs.
Despite being a powerful and innovative solution, SegWit is yet to be fully adopted. Currently, the percentage of Bitcoin addresses using SegWit is around 53%.
https://www.google.com/amp/s/academy.binance.com/en/articles/a-beginners-guide-to-segretated-witness-segwit.amp
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.
The percentage of fee reduction depends on number of outputs as well. With higher number of outputs, the percentage of fee reduction decreases. 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.
Example:
1 legacy input and 50 outputs -----> 1858 vbytes.
1 nested segwit input and 50 outputs -----> 1701 vbytes (8% decrease)
1 native segwit input and 50 outputs -----> 1678 vbytes (9% decrease)
P.S.
I used bitcoindata.science (a tool provided by bitmover) for calculations.
| Prefix | Category | Format |
| ________ | ___________________ | _______________________________________________________________________________ _____________ |
| 1… | Legacy-Address | P2PKH (pay to public key hash) |
| 3… | nested SegWit-Address | P2WPKH-P2SH (pay to witness public key hash - pay to script hash) / P2WSH-P2SH (pay to witness script hash - pay to script hash) |
| 3… | Multisignature-Address | P2SH (pay to script hash) |
| bc1q… | native SegWit-Address | P2WPKH-bech32 (pay to witness public key hash) / P2WSH-bech32 (pay to witness script hash) |
Taproot will also introduce P2TR (pay to taproot).
Also, Taproot have a lot to offer, Taproot will be activated mostly likely in November and some Bitcoin wallet update will support it, it also has low transaction fee, but it will favour many inputs, if the inputs of a transaction is more, the transaction fee will be cheaper than that of native segwit, but it will be otherwise if the output of a transaction is more, if the output of a transaction is more, segwit will have cheaper fee. And if comparing both input and output of a transaction together, segwit will only still have slightly cheaper fee that Taproot (but very little which may not that be significant), but as you know, Taproot is a big upgrade that is coming that Bitcoin users can use to take advantage of cheaper fee, especially for many input with one to few output transactions, and most especially for multisig transactions.
Yes, definitely looking forward to it. | Prefix | Category | Format |
| ________ | ___________________ | _______________________________________________________________________________ _____________ |
| 1… | Legacy-Address | P2PKH (pay to public key hash) |
| 3… | nested SegWit-Address | P2WPKH-P2SH (pay to witness public key hash - pay to script hash) / P2WSH-P2SH (pay to witness script hash - pay to script hash) |
| 3… | Multisignature-Address | P2SH (pay to script hash) |
| bc1q… | native SegWit-Address | P2WPKH-bech32 (pay to witness public key hash) / P2WSH-bech32 (pay to witness script hash) |
Also, Taproot have a lot to offer, Taproot will be activated mostly likely in November and some Bitcoin wallet update will support it, it also has low transaction fee, but it will favour many inputs, if the inputs of a transaction is more, the transaction fee will be cheaper than that of native segwit, but it will be otherwise if the output of a transaction is more, if the output of a transaction is more, segwit will have cheaper fee. And if comparing both input and output of a transaction together, segwit will only still have slightly cheaper fee that Taproot (but very little which may not that be significant), but as you know, Taproot is a big upgrade that is coming that Bitcoin users can use to take advantage of cheaper fee, especially for many input with one to few output transactions, and most especially for multisig transactions.
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:
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.
Translations:
Please note: reserving new translations is not available currently.
For Bitcoin addresses, different address formats exist. It is partly visible by having a look at their prefix:
| Prefix | Category | Format |
| ________ | __________________________ | _______________________________________________________________________________ _____________________ |
| 1… | Legacy-Address | P2PKH (pay to public key hash) |
| 3… | Multisignature-Address | P2SH (pay to script hash) |
| ________ | __________________________ | _______________________________________________________________________________ _____________________ |
| 3… | nested SegWit-Address | P2WPKH-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-Address | P2TR-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.
Translations:
| Language | translated by | Title |
| ___________________________ | _____________________ | _______________________________________________________________________ |
| العربية (Arabic) | Nalain420 | لماذا يجب أن يستخدم الناس عناوين Segwit |
| Deutsch (German) | 1miau | Vorteile der Verwendung von SegWit Adressen |
| French (Français) | paid2 | Pourquoi tout le monde devrait utiliser des adresses Segwit |
| Română (Romanian) | GazetaBitcoin | De ce oamenii ar trebui să utilizeze adrese SegWit |
| Nigeria (Naija) | knowngunman | Na why people go dey use SegWit addresses |
| Pakistan | Publictalk792 | لوگوں کو سیگوٹ ایڈریسز کیوں استعمال کرنے چ |
Please note: reserving new translations is not available currently.
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