When dealing with Bitcoin’s technicals, you will likely come across different types of wallet addresses, some start with a 1, some 3, and other begins with bc1. However, it’s quite difficult for a common reader to understand why they are named in such a way, and they represent two different Bitcoin address encoding formats, Base58Check and Bech32.
In today’s informative piece, we will dive deep to understand these two different encoding mechanisms and how they are helpful for Bitcoin.
What is Base58Check?
In simple terms, Base58Check is the legacy encoding format used for traditional Bitcoin addresses; it’s derived from Base58 encoding, but with an added checksum to detect errors and ensure data integrity.
Some key features of Base58Check include the usage in legacy addresses, mainly addresses starting with 1 (P2PKH) and 3 (P2SH), including a checksum to prevent typos, and excluding confusing characters like 0, O, I, and I.
This feature makes it human-friendly and is widely supported by wallets and exchanges.
Advantages of Base58Check
Widespread compatibility: Supported by almost all wallets and exchanges.
Mature and battle-tested: Used since the early days of Bitcoin.
Checksum protection: Includes a checksum to help detect address errors.
Disadvantages of Base58Check
Base58Check, despite being one of the oldest and most widely used formats in Bitcoin, comes with several limitations. One of the biggest drawbacks is its lack of native SegWit support, which results in higher transaction fees and less efficient block usage compared to Bech32 addresses.
Additionally, Base58Check uses a mixed case character set, which includes both uppercase and lowercase letters, making it more prone to typing errors and confusion, especially in manual entry situations.
Another issue with Base58Check is its basic checksum; while it can detect common typing mistakes, it lacks the advanced error detection features found in Bech32.
What is Bech32 encoding?
Bech32 was introduced with Bitcoin Improvement Proposal (BIP) 173, Bech32 is a newer address format that uses Segregated Witness (SegWit), a protocol upgrade designed to improve Bitcoin scalability and reduce transaction fees.
These addresses always begin with bc1 and use only lowercase letters. Unlike Base58Check, it has a stronger checksum and is designed to be more QR code-friendly, making it ideal for mobiles and hardware wallets.
Features of Bech32
Better error detection.
Lower transaction fees due to SegWit support.
More efficient encoding for QR codes.
Case insensitive.
Advantages of Bech32
Lower transaction fees: Bech32 addresses support SegWit, which reduces the size of transactions and thus the fees.
Enhanced error detection: Its checksum can detect more types of errors compared to Base58Check.
Optimized for QR codes: Shorter and cleaner, ideal for scanning.
Future-proof: Designed to support newer upgrades in the Bitcoin protocol.
Disadvantages of Bech32
Bech32, although designed to be the future of Bitcoin address encoding, still suffers from compatibility issues, as not all wallets and exchanges, and payment gateways support Bech32, especially older platforms, leading to failed transactions or requiring users to convert their address type.
The transition from BECH32 to BECH32m for Taproot addresses adds complexity for both developers and end users.
Some of the users find BECH32 addresses less intuitive, unlike Base58Check, where you can easily identify the address type from its first digit. All BECH32 addresses start with ‘bc1’, offering less visual information.
Conclusion
The difference between Base58Check and Bech32 is crucial for anyone interacting with Bitcoin. While Base58Check remains widely used due to its compatibility and long-standing support, Bech32 represents the future of Bitcoin addresses with its support for SegWit, lower transaction fees, and better error detection.
However, each format has its trade-offs. Base58Check is more recognizable and broadly supported, whereas Bech32 is technically superior but still lacks universal adoption.
