Difference Between SegWit vs Native SegWit (2024)

Crypto experts quote: "For greater privacy, it is best to use a Bitcoin addresses only once."

There are not one but multiple Bitcoin addresses; however, the current popular ones include Legacy, SegWit, and Native SegWit. All three addresses function differently. For instance, Legacy is not compatible with SegWit, which means you cannot receive Legacy Bitcoins from any other address formats, not even from SegWit and Native SegWit.

On the other hand, users can normally transfer their Bitcoins from Legacy to SegWit, implying that SegWit is compatible with non-native SegWit transactions. Speaking of Native SegWit, it reinforces extensive hardware wallets and software but is compatible only with a few exchanges. Moreover, Native SegWit is the cheapest among all.

Now, let’s hop into understanding SegWit and Native SegWit and their differences a little better.

Understanding SegWit

Digital signatures take up over 65% of any transaction on a blockchain. It is applicable for any given transaction on the blockchain. Space-wise it is a lot, and mostly unessential, as several crypto experts remark.

This is where SegWit comes into action. SegWit, or Segregated Witness, serves two main functions. Firstly, it reduces the amount of space consumed by the signature by exclusively managing the data of the given signature. Secondly, SegWit transports these digital signatures from their input structure to their final transaction stage.

Advantages of using SegWit

Segregated Witness addresses offer the following benefits to their users:

1. SegWit offers effective solutions to common Bitcoin problems like boosting efficiency in operations and cheaper transactional fees.
2. It helps crypto users to carry forward multiple transactions without affecting the overall Bitcoin blockchain size.
3. SegWit can enhance the transaction speed, enabling Bitcoin transactions at cheaper rates.
4. Multiple crypto users face scalability issues when involved in any Bitcoin transaction. A SegWit address can solve this basic problem quite effortlessly.

Disadvantages of using SegWit

Some of the complications that users should be aware of are mentioned below:

1. Miners cannot generate large profits because there is a witness data side chain in the support chain, which hinders fee revenue.
2. SegWit can only temporarily address the problem of scalability, while the issues prevail in the long term. Bitcoin miners also believe that there is a long-running problem in processing transactions.
3. Furthermore, SegWit encounters a series of ongoing disagreements, which can cause future division within the Bitcoin community.

Understanding Native SegWit

This address is also popular as Native Segregated Witness or the Bech32 address. Unlike all other Bitcoin addresses of P2 styles, this address carries a completely different format, starting with bc1. Regarding compatibility, Native SegWit is fairly compatible with all Segregated Witness addresses.

As Native SegWit’s history goes, the main intention why developers implementing it was to bring forth Bitcoin improvements. However, Negative SegWit became one among the various addresses which merged with the core ones. Additionally, Native SegWit addresses carry a mixed case formatting as initial addresses were prone to input errors during transactions. Also, the initial addresses are comparatively difficult to group.

Advantages of using Native SegWit

Native SegWit addresses offer its users the following advantages:

1. Native SegWit is available at a comparatively lower transaction fee than all segregated witness addresses.
2. When using a Native SegWit address on the Blockchain platform, users will get a superior experience.
3. Users of Bech32 addresses can identify incorrect characters in their transactions, thus witnessing safe and secure transactions, eliminating all hassles along the blockchain platform.

Disadvantages of using Native SegWit

Users also face two major complications when using a Native SegWit address:

1. Native SegWit, a comparatively newer address, is mostly not compatible with older software. As a result, users often fail to verify their messages in most other software.
2. One major benefit of using this address is that it offers cheaper transaction fees, which is a disadvantage from a minor's perspective. Minor crypto users often complain that they cannot generate big profits due to lower transaction fees.

Difference between SegWit and Native SegWit

Native SegWit is the latest address format that exists to this date. Compared to SegWit, Native SegWit is more weight-efficient, transaction fees are faster, offers better scalability, and is available at lower transaction fees for every Bitcoin transaction. In addition, Native SegWit also features better error detection and promotes better readability, as the address carries lowercase formatting.

On the other hand, SegWit offers support to multiple platforms, unlike bech32. Moreover, a SegWit and a Native SegWit address are fully compatible; however, not many Bitcoin wallet providers support the bc1 address at present.

Conclusion

The difference between the two address formats represents their revolutionary journey. Although, SegWit’s nature seems more promising currently, Native SegWit has more chances of overtaking other addresses in the future by solving existing issues.