Bitcoin Address Formats Explained: SegWit vs. Native SegWit (Bech32)

/Aug 25, 2025

Key Takeaways

• SegWit addresses start with '3' and improve transaction efficiency and capacity.

• Native SegWit (Bech32) addresses start with 'bc1' and offer the lowest fees and best error detection.

• Compatibility varies, with SegWit being widely supported and Native SegWit gaining traction among modern wallets.

The Bitcoin ecosystem is always evolving, with improvements aimed at scalability, efficiency, and user experience. Among the most significant upgrades in recent years are SegWit and Native SegWit (Bech32). Understanding the difference between these two address formats is essential for anyone making Bitcoin transactions or securing their assets with hardware wallets.

What is SegWit?

Segregated Witness (SegWit) is a protocol upgrade implemented on the Bitcoin network in 2017. Its main purpose was to address transaction malleability—a vulnerability allowing transaction IDs to be changed—and to increase Bitcoin’s capacity by separating signature (witness) data from the transaction data.

Address Format: SegWit addresses typically start with “3” (example: 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy).
Functionality: SegWit stores witness data separately, allowing for reduced transaction sizes, faster processing, lower fees, and easier scalability.
Compatibility: As SegWit was designed for backward compatibility, most wallets and exchanges support SegWit addresses.
Learn more about SegWit and its impact on Bitcoin

What is Native SegWit (Bech32)?

Native SegWit (Bech32) is an upgraded address format built on top of SegWit protocol improvements. It uses the Bech32 encoding, which brings further enhancements in transaction efficiency and error detection.

Address Format: Bech32 addresses begin with “bc1” (example: bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf8c9m) and are not case-sensitive, making them less prone to input mistakes.
Functionality: Native SegWit stores both witness and transaction data together, optimizing block space usage. This results in the lowest transaction fees and fastest confirmations currently possible on Bitcoin, as well as improved security due to a different hashing algorithm.
User Experience: The format is easier to read and type, with better error detection and prevention of common input mistakes.
Compatibility: While increasingly supported, not all wallets and exchanges accept Bech32 addresses. Users should confirm compatibility before transacting.
Comprehensive explanation of Bech32 addresses

Key Differences: SegWit vs. Native SegWit

Aspect	SegWit (P2SH)	Native SegWit (Bech32)
Address Prefix	3	bc1
Backward Compatibility	High	Lower (but improving)
Transaction Fees	Lower than legacy	Lowest
Error Detection	Basic	Enhanced
Block Size Efficiency	Improved	Maximum
User Experience	Case-sensitive, more errors possible	Not case-sensitive, fewer errors
Adoption	Widely supported	Increasing, but not universal

For a deep dive into technical differences and benefits, see this authoritative comparison.

Recent Industry Trends

As of 2025, Native SegWit (Bech32) addresses have become the most common format among modern wallets, driven by their superior transaction fee savings and error resistance. More exchanges and wallet providers are moving towards full Bech32 support, although some legacy systems still lag behind. Users benefit from the increased efficiency and security features, especially as the Lightning Network and other Layer 2 solutions adopt Bech32 natively.
Stay updated on industry adoption and technical standards via Bitcoin Optech's address format guide.

Why Does Address Format Matter for Your Wallet?

Choosing the right address format impacts your transaction fees, speed, and overall security. For users who prioritize cost efficiency and seamless experience, Native SegWit is ideal—provided their chosen wallet and exchange fully support it.

For hardware wallet users, compatibility and security are paramount. OneKey hardware wallets are designed to support both SegWit and Native SegWit formats, ensuring that you benefit from low fees, high transaction speed, and robust security features. With OneKey, you can easily manage different Bitcoin address types and always stay at the forefront of blockchain advancements.

Conclusion: Which Should You Use?

If your wallet and exchange support Native SegWit (Bech32), choose it for the lowest fees and best error detection.
If compatibility is your main concern, SegWit (P2SH) offers broad support and solid efficiency.
For users seeking a future-ready, secure, and user-friendly experience, hardware wallets like OneKey deliver seamless integration with both formats.

To learn more about secure Bitcoin storage and the latest address technologies, you can refer to bitcoin.org's official documentation.

Choosing the right Bitcoin address format is essential for maximizing transaction efficiency and security. OneKey hardware wallets help you navigate these choices, offering full support for both SegWit and Native SegWit, so you can transact confidently in the evolving crypto landscape.