Mar 20, · SegWit (P2SH) and Native SegWit (bech32) are not the first address formats to exist for Bitcoin accounts. The very first one was Legacy, where addresses would start with a “1”. As Bitcoin’s price started to take off, the fees paid for each transaction started to look more pricey too. Mar 16, · SegWit is an optional upgrade, but allows cheaper and faster transactions, by implementing the most recent advancements on the Bitcoin network. To upgrade your current accounts with SegWit, open your wallets, press the "upgrade" button at the bottom popup message and confirm with your password. Each address type is backwards compatable with the previous one. So a segwit address has all of the benefits of the previous versions built into it and knows how to utilize them. A legacy address doesn't know about any of the segwit code, and cannot benefit from any of the improvements. This all get's tied together at the transaction level.
Bitcoin address segwit or legacyBitcoin: What’s the difference between SegWit and Native SegWit (Bech32)? | Ledger
I have covered the specifics of the scaling debate here in case you are interested in reading it. However, using this address type is not mandatory as it was a soft-fork but I still highly recommend you to opt for segwit addresses because of many benefits such as these and these. For now, I will list some the benefits that you can enjoy by using segwit addresses.
Hence I feel it makes more sense in migrating to a segwit address for your day to day Bitcoin transactions. Here is a list of Segwit supported wallets that you can choose from. And if you have Ledger Nano S wallet which was the first hardware wallet to support segwit, follow the below-given steps to migrate to segwit.
Launch the Ledger Wallet Bitcoin application on your desktop. Connect your Ledger device and enter your PIN code. You will be prompted to select Bitcoin or Bitcoin cash.
Your Bitcoin segwit wallet will open and look like this. Copy this segwit address and paste it somewhere into a file. Now you should be able to see this screen where you can paste the previously copied segwit address in step 7 , in the recipient address field. Fill in the amount, the fees, and send your transaction to the segwit address.
Also, this will be a transaction on the blockchain so you need to pay the necessary transaction fees too. Now its time to hear from you: Are you using segwit addresses and enjoying its benefits? Have you migrated from legacy to segwit in your Ledger Nano S device? Do share with us in the comments section below. Love this article? This means having an even faster transaction speed versus SegWit transactions, better scalability and even lower fees per transaction.
To add to this, bech32 has better error-detection and makes addresses lowercase only for better readability. The only downside of bech32 is that not every major platform supports this address format yet. Previous article. Share this article.
A SegWit transaction splits segregates a transaction into two pieces: one containing the standard legacy data to, from, amount, Since the witness contains, among other things, a "minified version" of legacy data it allows a SegWit transaction to be sent to a legacy address, or to a SegWit address as a cheaper transaction due to less data transferred.
A legacy address however doesn't know about the witness, so it cannot include it in a SegWit transaction and reap the benefits. That's okay though, because a SegWit address doesn't need the witness data, so a legacy address will have no problem sending tokens to a SegWit address. When you have UTXOs in your wallet, they may be from either one of the transaction types. For any address, that UTXO's data either contains the legacy data, or the witness data, depending on what type of transaction was used to send the coins.
Note on Mixed Script Transactions: These are transactions where UTXOs hat may have come from different script types are placed into a single transaction. It's also an illustration of what happens when a coins are sent to different address types. NOTE: Some older wallet clients, or ones without SegWit support may not recognize newer versions of addresses as valid, and won't let you send to them: this is a precautionary measure in the wallet code, not bitcoin code to prevent users from sending to a non-bitcoin address.
Wallet client aside, if you manually broadcast the transaction on the bitcoin network itself, everything is interoperable. At a protocol level, they are all compatible. Transactions can spend any of them, and send to any of them. Wallet software may of course have restrictions, but these are usually not about combinations. However, I have not heard about software that puts restrictions on where it can send to based on what is being spent, for example.
There are no restrictions on sending from any type of outputs to any address type in the Bitcoin protocol, but some older wallets might not support sending to newer address types.
In any case, issues with sending to any specific address type are caused by missing functionality in the sender's wallet and in no way related to the input types used.
There are no restrictions on sending from any type of outputs to any address type in the Bitcoin protocol. The ability to limit where the "unlocked" bitcoin UTXO could go is actually a missing feature of bitcoin, called "covenants". Currently people could only use tricks like presigned time-locked transactions to achieve similar goals. In the future maybe this could be done in a more intuitive and powerful way.
Also, obviously you can't generate any SegWit address with an old wallet without any SegWit support, so that you can't receive bitcoins with any SegWit address using such a wallet - the solution to this problem is simple: just upgrade the wallet to SegWit-supporting version, or switch to another wallet with proper SegWit support.
A transaction sending bitcoins all from 1-starting P2PKH legacy addresses doesn't enjoy discounts of SegWit, so that it has the most expensive miner fees among those three address types. In fact SegWit v0 doesn't reduce transaction data size so much, its cheap miner fee is mainly an artificial discount. However SegWit transactions indeedly has technical advantage over legacy ones, like, avoiding the quadratic sighash problem. A transaction sending bitcoins from 3-starting P2SH-wrapped "compatible" SegWit address actually consumes more bytes than a legacy 1-starting address mainly because P2SH "script hash" itself consumes 20 bytes , however, it still has cheaper miner fee than 1-starting legacy address due to discounts.
A 3-starting address is P2SH , which was brought by Gavin Andresen at very early stage of the history of bitcoin , so that it's now highly improbable to see a wallet which can't recognise 3-starting P2SH addresses.
SegWit utilize P2SH to "wrap" its special "anyone-can-spend" script. P2SH can actually "wrap" anything. Its typical usage has been multi-sig for quite a long time, much earlier than SegWit. When an old wallet sends bitcoins to a 3-starting address, it the payer doesn't care about what kind of stuff is "wrapped inside" that address at all. It can be either a legacy multi-sig, SegWit, or something other - whatever, it doesn't matter.
It's then the responsibility of the payee to ensure that s he can still spend the bitcoins on that 3-starting address. Old versions pre However they would still accept SegWit blocks as if those blocks were valid, despite they cannot fully validate them - the forward compatibility usually called "backwards compatibility" by a lot of developers is still retained, in the sense that old nodes which are not SegWit-aware can still work as normal.
They would accept confirmed SegWit transactions only, in other words, SegWit blocks only. Therefore, if you want to break SegWit rules, you must at least become a solo miner yourself, an almostly cost-free attempt like sending invalid "robbing" transaction from some SegWit addresses won't work at all.