Formats, network checks, address reuse and the verification habits that prevent costly mistakes. The explanation separates Lightning channel behavior from final settlement on Bitcoin's base layer.

Key takeaways
  • Addresses are payment instructions, not identities.
  • Always confirm the network and full destination.
  • Use a fresh receive address when practical.
01

An address encodes conditions

A Bitcoin address is a user-facing encoding related to a locking script. Modern formats improve error detection and efficiency, but compatibility varies across older services.

02

Networks must match

Mainnet, testnet and other networks use distinguishable formats, yet users should still confirm the selected network. Sending another asset or using an incompatible chain can make recovery difficult or impossible.

Name the layer and the actor. Wallets create transactions, nodes check rules, miners propose blocks, and Lightning peers manage channels.
03

Fresh addresses improve privacy

Reusing an address makes it easier to associate payments and balances. Hierarchical deterministic wallets generate many receive addresses from one backed-up seed, so freshness does not require a new backup every time.

04

How an address is made and checked

An address is a public key hash or a script hash, plus a version prefix, plus a checksum, encoded so it can be copied by hand. Legacy addresses use Base58Check, whose four-byte checksum catches almost all typos.

SegWit addresses use Bech32, an encoding designed so that any single error and most combinations of errors are detected, with a character set that avoids ambiguous letters and works in QR codes at a smaller size. Taproot uses Bech32m, a small correction to Bech32.

A wallet that rejects an address is nearly always right; a wallet that accepts one only confirms it is well formed.

05

The formats side by side

Addresses starting with 1 are pay-to-public-key-hash, the original format, still valid, with the largest inputs. Those starting with 3 are pay-to-script-hash: the script can be a multisig or, commonly, a wrapped SegWit script that lets older senders pay a SegWit user. bc1q addresses are native SegWit, either a key hash of 42 characters or a script hash of 62.

bc1p addresses are Taproot, 62 characters, introduced in late 2021. All four coexist and any wallet can send to any of them, though a few older services still cannot send to bc1p.

06

Addresses and privacy

An address is not an account. Wallets generate a new one for every payment you receive, all from the same seed, precisely so that your incoming payments cannot be trivially linked on the public ledger.

Reusing an address does not risk the coins, but it ties everything sent to it together and, if the address is ever connected to your name, connects all of it to you.

Give each counterparty a fresh address, avoid posting a single 'donations' address anywhere permanent, and let the wallet manage the rest; the Bitcoin privacy guide covers what the ledger reveals beyond addresses. The address checker on this site identifies type and network without touching the chain.

Test the payment path carefully

Use a small payment to learn how invoices, liquidity, routing, timeouts, and channel backups behave. Keep the on-chain recovery path clear before depending on a Lightning wallet.

Q&A

Common questions

Why do addresses start with 1, 3 or bc1?

They are different formats. Addresses beginning with 1 are legacy pay-to-public-key-hash, 3 are script addresses often used for multisig or wrapped SegWit, bc1q are native SegWit and bc1p are Taproot. All are valid; newer formats produce smaller, cheaper transactions.

Can I reuse an address?

It works, but it links every payment to the same public key and makes your history easy to follow. Modern wallets generate a fresh address for each receipt from the same seed, so reuse offers no benefit.

Which address type has the lowest fees?

Native SegWit (bc1q) and Taproot (bc1p) inputs weigh less than legacy inputs, so transactions spending from them cost less at the same fee rate. The fee depends on the sender's inputs, not on the recipient's address type.

Sources

Sources and further reading

Primary documents this guide draws on. Links open the original publisher.

  1. BIP 173: Bech32 address format Bitcoin Improvement Proposals
  2. BIP 350: Bech32m format for v1+ witness addresses Bitcoin Improvement Proposals
  3. BIP 341: Taproot Bitcoin Improvement Proposals
  4. Address Bitcoin Wiki