We don't hear it common but over and over there has been transfer gone wrong when sending Bitcoin to address, either to a wrong address or to a wrong network. Identifying address by format eradicate such mistakes because it helps decide what type of wallet or transaction is in use before sending.
| Address Format | | | Identify By Prefix | | |
| Legacy (P2PKH) | | | Begins with "1" - Bitcoin core and old Bitcoin mobile wallets | | |
| P2SH | | | Begins with "3" Still part of segwit but older version | | |
| Native Segwit (Bech32) | | | Begins with "bc1q" - modern and updated version of segwit | | |
| Taproot Segwit (Bech32m) | | | Begins with "bc1p" - wallets like BlueWallet, Electrum and Sparrow wallet use taproot etc... | | |
| Lightning Invoice | | | Begins with "lnbc1" - lnbc1 for Bitcoin, lntb for testnet | | |
Fees Comparison| Address Format | | | Fee Levels | | |
| Legacy (P2PKH) | | | Highest Fees | | |
| P2SH | | | Medium - Better than Legacy | | |
| Native Segwit | | | Lowest | | |
| Taproot Segwit | | | Low - Better than P2SH (Simple tx X Complex tx ✓) | | |
| Lightning Invoice | | | Zero or little | | |
Identifying any address can be done simply by knowing each prefix, another similar method is length of address but that may not be efficient as two address can have very close characters, example of P2SH and Legacy having close or similar characters.
This is very educating and I can say that this thread is definitely coming at the right time and also very novel. These are the kinds of threads I long after where I learn things that really matter in the crypto market. With this knowledge, someone can be assured that he can be able to avoid scams or any misplaced or mistaken bitcoin transfer as there has not been any known system for getting back bitcoin transferred to wrong addresses. With the prefixes attached, one can be sure of where exactly he's transferring his bitcoin to.
Begins with "bc1p" - wallets like BlueWallet, Electrum and Sparrow wallet use taproot etc...
This is actually the most updated version of SEGWIT addresses. Infact it's actually the most recent and they fixed some really technical stuff but it's efficiency is almost equal to that of
bc1q prefixed addresses.
Also take note that fees depend on two major things which are the address type (sender) and most importantly the number of UTXO ( more like the number of outputs and inputs required to complete the transaction) the more it is the higher the size. So you can control the fee rate but size depends on your UTXOs.
This helps also in financial management when choosing your transaction partner in order not to incur some avoidable costs. When you are sending to a similar address, I guess it would be cost free?? Haven't actually transferred out to a different wallet mainly due to fear of loosing my assets.