What are the different formats of Bitcoin wallet addresses? Which one can save transaction fees?

In the crypto world, wallet addresses are as important as "bank account numbers" and "mailing addresses". Any operation cannot be separated from them. With the birth of the Ordinals protocol, the adoption of Bitcoin based on Segregated Witness and Taproot upgrades has been promoted, which has made many people use special address formats such as "bc1p" for the first time. So how many formats of Bitcoin wallet addresses are there, and what are their characteristics? Today, let's take a look at them together...

What is a Bitcoin address?

A Bitcoin address is used to send and receive Bitcoins, just like a traditional bank account. Anyone who has your bank account can send you Bitcoins, and you can also transfer Bitcoins to other accounts.
A Bitcoin address is a string of letters and numbers. Here are a few examples:

These Bitcoin addresses will show the source of Bitcoin receiving and sending, telling people where Bitcoin comes from and where it goes. In fact, it is just like the email system that sends and receives emails, but in the Bitcoin scenario, the email content is Bitcoin, the email address is the Bitcoin address, and the mailbox is the Bitcoin wallet.
However, it is worth noting that a single address does not necessarily mean a single user . There may be a group of people behind one address, and one person may have multiple addresses.

02 Bitcoin address type classification

As you can see from the above picture, Bitcoin addresses all start with the prefix 1, 3 or bc1. There are no other prefixes. Why is this? This is because they use a different address format. In fact, there are four main types of Bitcoin addresses:
1. Legacy/Payment Public Key Hash (P2PKH) address <br/>This type of address is a traditional Bitcoin address, called a legacy address, also called a payment public key hash (P2PKH) address, because when Bitcoin was launched in 2009, its generation started with the generation of a public key/private key pair. At that time, this was the only way to create an address.
Today, these types of addresses use the most space in transactions and are therefore the most expensive type of address. However, they are easy to identify because they all start with a "1".
Example: 15f12gEh2DFcHyhSyu7v3Bji5T3CJa9Smn
Currently, this type of address is only used when using some old wallets that are incompatible with the new address.
2. Pay-to-Script-Hash (P2SH) address <br/>Compared with the traditional address starting with "1", the P2SH address is not the hash of the public key, but the hash of certain technical scripts. It can be used for transfers requiring multiple signatures, etc., and can even use segregated witness to save transaction fees. Sending to a P2SH address is about 26% cheaper than using a wallet with an old address.
Example: 35PBEaofpUeH8VnnNSorM1QZsadrZoQp4N
3. Segregated Witness Address (SegWit) Bech32 Address
Segwit addresses are also called Bech32 addresses, and their characteristic is that they start with bc1q. This type of Bitcoin address reduces the amount of information stored in transactions. They do not store signatures and scripts in transactions, but in witnesses. Therefore, Segwit addresses can save about 16% of transaction fees compared to P2SH addresses, and more than 38% of fees compared to traditional addresses. Due to this cost saving, it is the most commonly used Bitcoin transaction address.
Example: bc1q42lja79elem0anu8q8s3h2n687re9jax556pcc
But some exchanges and wallets don’t support Segwit addresses yet, so they prompt users to send them P2SH addresses. That’s why most wallets still include the option to create P2SH or even legacy address wallets.
4. Taproot address <br/>In order to improve the efficiency of block space and improve costs, SegWit introduced some changes in the way addresses are constructed. Therefore, based on the SegWit address, a Taproot address starting with "bc1p" was developed, which translates to the taproot address. This type of address further reduces storage space, improves transaction efficiency, and provides better privacy.
Example: bc1pmzfrwwndsqmk5yh69yjr5lfgfg4ev8c0tsc06e