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Why does SegWit implement new address formats?

Bitcoin Stack Exchange

Bitcoin News / Bitcoin Stack Exchange 173 Views

There had to be a way to distinguish between segwit addresses and "legacy" addresses so that software could correctly identify the type of transaction it needed to create.

The obvious approach would have been to use a new "version number" on the usual Base58 address format (like how P2PKH addresses start with 1, P2SH start with 3, so maybe SegWit could have started with S).

However, the totally new Bech32 address format had a lot of useful improvements unrelated just to SegWit. It was just a good time to introduce it. Benefits include much better error detection (and correction), better security to avoid hash collisions in P2WSH scripts because the hash encoded is longer, less ambiguity when transcribing addresses since mixed case isn't allowed (which also allows more efficient encoding in QR codes), and more descriptive human-readable prefixes.


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