I noticed that many newcomers to crypto get confused about Bitcoin addresses. In fact, it’s not that hard to figure this out if you understand the logic. Right now, there are four main address formats in the network, each with its own history and purpose.

Let’s start with the oldest one — P2PKH. These are addresses that start with a 1, like 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2. Satoshi Nakamoto came up with them, and this is called Pay-to-Public-Key-Hash. The essence is simple: instead of sending funds directly to a public key, they go to its hash. This improves privacy because the real key isn’t disclosed. Plus, the data in the blockchain becomes more compact. This type of Биткойн address remains the most common and understandable even today.

Then P2SH came along — addresses starting with “3”. Gavin Andresen introduced it in 2012 specifically for complex scenarios, especially for multisignature (multi-sig) setups. Here, the payment is tied to the script hash, not the key. The sender only knows the hash, and the real script is revealed only when spending. This gave Биткойн more flexibility and made it possible to support more complex transactions without exposing their details.

Then came Bech32 — addresses with the bc1q prefix. The name comes from the first letters of the developers’ last names Peter Wuille and Greg Maxwell, plus the ech algorithm for error correction. This format can distinguish similar characters like 1 and l, 0 and o, which reduces the risk of mistakes when entering. These are SegWit addresses—more advanced and more efficient.

And finally, Taproot — the newest one. It starts with bc1p. This is an evolution of SegWit that further compresses transaction sizes and improves privacy. Based on SegWit, this format was developed to boost blockchain efficiency and reduce fees. All these types of Биткойн addresses coexist in the network, and each one makes sense in its own context.

By the way, many people notice that wallets generate a new address after every transaction. This isn’t a bug—it’s a feature. That’s how HD wallets work—hierarchical deterministic wallets based on BIP32 and BIP44. They create an entire chain of addresses from a single starting value, which makes backups easier. All addresses are generated deterministically, so it’s enough to save the seed, and you can restore all the funds.

Why is this done? Confidentiality. If you use one address for all transactions, the entire history is visible on the blockchain. A new address each time makes your movements harder to track. Plus, it improves security: if one private key is compromised, only the funds on that single address are at risk—the rest are safe.

All these address types work thanks to elliptic curve cryptography, specifically the secp256k1 algorithm. Each address is linked to a unique pair of keys, and all of this is generated very quickly. If you manage multiple addresses, you don’t need to change wallets—modern solutions normally support this.

If you want to go deeper and experiment with different addresses, you can create a wallet on Gate and try it. There’s solid support for all these formats, and the interface is intuitive even for beginners.