Bitcoin address types compared: P2PKH, P2SH, P2WPKH, and more

Initially printed on Unchained.com.Unchained is the official US Collaborative Custody companion of Bitcoin Journal and an integral sponsor of associated content material printed by Bitcoin Journal. For extra info on providers provided, custody merchandise, and the connection between Unchained and Bitcoin Journal, please go to our web site. 

In case you’ve been utilizing bitcoin for some time, you’ve most likely seen that some bitcoin addresses seem fairly totally different from others. You will have additionally seen dialogue round a number of acronyms starting with “P2,” comparable to P2PKH or P2WSH. In case you’re unfamiliar with what these acronyms imply, right here we’ll look by all of the standardized on-chain strategies for receiving bitcoin all through its historical past and clarify some important variations that make every technique distinctive.

P2PK

Pay-to-Public-Key (P2PK) is the unique technique of receiving bitcoin, and it doesn’t contain an deal with. As a substitute, because the title suggests, bitcoin is paid on to an uncovered public key. The primary ever bitcoin transaction from one particular person to a different used P2PK, when Satoshi Nakamoto despatched cash to Hal Finney in Block 170.

P2PK is now not used as a result of it’s a costlier, much less personal, and fewer safe manner of receiving bitcoin than subsequent strategies.

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P2PKH

Pay-to-Public-Key-Hash (P2PKH) was out there to be used at bitcoin’s starting, and it confirmed up on the blockchain for the primary time lower than two weeks after the genesis block. P2PKH makes a number of enhancements upon P2PK, comparable to using an deal with. As mentioned in our earlier article, addresses comprise a checksum that helps stop typos and misplaced bitcoin.

P2PKH addresses are sometimes 34 or 33 characters in size (however might theoretically be as quick as 26 characters), and they’re encoded in Base58 format. They start with a prefix of 1 and are presently accountable for receiving and securing 43% of the mined bitcoin provide, greater than some other deal with kind.

Making a P2PKH deal with includes placing a single public key by hash features SHA-256 and RIPEMD-160. This shortens the quantity of knowledge, which in flip helps save block area and transaction charges for the person. It additionally introduces additional resistance to reverse-engineering the personal key past the already believed-to-be-unbreakable secp256k1 elliptic curve.

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P2MS

Pay-to-Multisig (P2MS) is a trivial transaction kind that was solely briefly related and has by no means been accountable for holding greater than 100 bitcoin at one time throughout all community members. However, P2MS is part of bitcoin’s historical past.

P2MS was launched as a normal script in early 2012, as specified by BIP 11. Nonetheless, this transaction kind suffered from the identical issues as P2PK because it included uncovered public keys and didn’t use any deal with format. It additionally restricted the variety of public keys in a multisig quorum to a few. Inside months P2MS would get replaced by another technique for receiving bitcoin right into a multisig association referred to as P2SH, which we are going to cowl subsequent.

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P2SH

Pay-to-Script-Hash (P2SH) was launched to bitcoin as a gentle fork in accordance with BIP 16 on April 1, 2012. Like most forks, the story behind it’s fascinating. P2SH shares loads in widespread with P2PKH. The principle distinction is that the deal with is created by hashing a redeem script as an alternative of hashing a single public key. 

A redeem script may be regarded as coded directions specifying how bitcoin obtained to the P2SH deal with may be spent sooner or later. There may very well be a variety of potentialities, together with a number of totally different public keys. The receiver, not the sender, determines the script particulars, and the spending directions usually are not uncovered publicly till bitcoin is spent out of the deal with.

Whereas superior customers can assemble complicated scripts, the most typical makes use of for P2SH have been to create Nested SegWit addresses (lined beneath) and multisig wallets. For instance, a script can embrace three public keys and specify that signatures from any two of the corresponding personal keys can spend the bitcoin. This could create a 2-of-3 multisig deal with.

P2SH addresses are precisely 34 characters in size, and so they start with a prefix of three, as specified by BIP 13. Earlier than the gentle fork on April 1st, a handful of transactions experimented with this various prefix, the primary of which is present in Block 170,052.

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P2WPKH

Pay-to-Witness-Public-Key-Hash (P2WPKH) is the primary of two deal with varieties launched to bitcoin upon the SegWit gentle fork in August 2017. The story behind this extraordinarily vital and notably contentious gentle fork is documented in a ebook referred to as The Blocksize Struggle, written by Jonathan Bier.

P2WPKH is the SegWit variant of P2PKH, which at a fundamental stage, signifies that selecting this deal with kind fairly than older P2PKH addresses will assist you get monetary savings on transaction charges when shifting your bitcoin round.

SegWit addresses look fairly totally different from the older deal with varieties as a result of, per BIP 173, they use Bech32 encoding as an alternative of Base58. Most notably, there are not any capital letters in Bech32. P2WPKH addresses may be recognized by a prefix of bc1q and a personality size of precisely 42.

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P2WSH

Pay-to-Witness-Script-Hash (P2WSH) is the SegWit variant of P2SH. The principle benefit to utilizing P2WSH over P2SH is that it will possibly assist decrease transaction charges, and the first purpose to make use of a script hash as an alternative of a public key hash is to accommodate multisig preparations.

Like P2WPKH, a P2WSH deal with begins with a prefix of bc1q. Nonetheless, it has an extended character size of precisely 62. In contrast to the deal with varieties lined to this point, P2WSH addresses are created utilizing the SHA-256 hashing perform alone, with out together with RIPEMD-160, ensuing within the elevated character size. This was carried out cautiously, including further safety from a reasonably nuanced and very unlikely multisig assault vector.

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Nested SegWit (P2SH-P2WPKH and P2SH-P2WSH)

Nested SegWit (also referred to as Wrapped SegWit) is technically not a special deal with kind than we’ve lined above. Nonetheless, it’s a distinctive manner to make use of beforehand mentioned deal with varieties in a way that was quickly helpful for the bitcoin group.

When the SegWit soft-fork occurred, not all bitcoin nodes, software program, and providers instantly upgraded to assist the brand new Native SegWit deal with varieties, P2WPKH and P2WSH. Solely the entities that did improve might ship to those new addresses. This meant that people who needed the power to obtain bitcoin from anyone (together with those that hadn’t upgraded) couldn’t use a Native SegWit pockets but. Nonetheless, since SegWit provided cheaper transaction charges, most individuals have been eager to start utilizing it.

The artful resolution to this dilemma was to make the most of the P2SH transaction kind. The entities that had not but carried out SegWit might nonetheless ship bitcoin to P2SH addresses—which, as mentioned above, are constructed with a redeem script specifying the directions on how the bitcoin may be spent in a while. Because it seems, these directions might incorporate the brand new SegWit spending mannequin, offering customers with a bridge to lowered charges. Subsequently, the P2SH addresses utilizing this trick turned often called Nested SegWit, and so they performed a major function within the SegWit adoption course of.

On the floor, Nested SegWit addresses are indistinguishable from different P2SH addresses, so the provision of bitcoin held on this association is unknowable. Moreover, since all fashionable bitcoin instruments can now ship on to Native SegWit addresses, there isn’t a longer any good purpose to make use of Nested SegWit.

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P2TR

Pay-to-Taproot (P2TR) is the most recent deal with kind, made out there by the Taproot soft-fork in November 2021. P2TR adoption stays fairly low on the time of writing, and plenty of bitcoin softwares and providers are nonetheless engaged on integration.

Whereas P2WPKH and P2WSH are often called SegWit V0, P2TR is taken into account SegWit V1. Notably, P2TR makes use of a digital signature algorithm referred to as Schnorr, which differs from the ECDSA format utilized in earlier bitcoin transaction varieties. Schnorr signatures have a number of benefits, together with extra transaction charge reductions and elevated privateness.

Concerning privateness, the important thing and signature aggregations made attainable by Schnorr permit multisig addresses to be indistinguishable from singlesig, and the total spending circumstances for a P2TR deal with usually are not essentially revealed publicly. The creator of the deal with may even embrace a number of personalized redeem scripts to select from with the intention to spend the bitcoin later.

P2TR addresses are 62 characters lengthy, and so they use Bech32m encoding, a barely modified model of Bech32, as described in BIP 350. P2TR addresses may be recognized by their distinctive bc1p prefix.

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Reference chart

Now that we’ve lined all standardized strategies to obtain bitcoin on-chain, among the fast information and deal with options may be mixed right into a handy chart for reference.

Initially printed on Unchained.com.Unchained is the official US Collaborative Custody companion of Bitcoin Journal and an integral sponsor of associated content material printed by Bitcoin Journal. For extra info on providers provided, custody merchandise, and the connection between Unchained and Bitcoin Journal, please go to our web site. 

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