Bitcoin Address Types that are Growing in the Payment Use Case
Payment address that are used in the crypto always intrigued me. Each crypto has it's own address system that is kind of unique in it's own ways. In case of the bitcoin there are multiple address are being used for the payment and also the layer 2 address are there on the chain too.
So today I thought why not write about the variety of the address types that bitcoin offers. So I decided to pick those address types which are increasing in it's use case and also they are kind of in use in variety of the layer 2 solutions too. Below are some of the address that we are covering - P2WPKH, P2WSH and P2TR.
Let's take a look at the bitcoin address type that are growing in the payment use case.
Pay-to-Witness-Public-Key-Hash (P2WPKH)
This method known as the pay to witness public key hash also in short P2WPKH. This has the 3.8M supply about 20% of the BTC. The block was first observed by the year 2017 in the august month. This was one of the sigwit variant that was developed during the time. This was for saving the transactions fees compared to the basic address and instead sigwit variant is being in use.
Saylor academy has covered this address type from the developer context and you can check more about it's technical part here. Here the witness program was added into the system before the P2WPKH system is even made. So the locking and the unlocking mechanism was also observed in this type of the address format. You can learn about it in the saylor's reference that you can check above.
Pay-to-Witness-Script-Hash (P2WSH)
Another sigwit variant also known as the P2WSH. This was one of those variants that are increasing in the use case. It locks the output of the hash of the custom locking script. Here in this variant there is unlocking through the witness. And so the new method of the P2WSH is no more scripting locked. You can check the refernce for this in the saylor academy here.
This has the supply of 3.8M which is 20% of the BTC supply. And this address was first observed in the august 2017 too. So it's another one of those address types which are increasing in the use case. You would find the use case with some of the apps and the layer 2 solutions which are kind of helping save the fees in the chain. So in that sense it's worth knowing about this address.
Pay-to-Taproot (P2TR)
This is one of the recent address types which are observed after the pandemic like in the month of Nov 2021. So the pay to taproot is one of the new address types which are increasing in the use case. It has very limited supply as of now which is 0.1% of the BTC. You can read about this new address type in the River finance where this reference can be found here.
You may notice this address type locks the bitcoin to the script and it can be unlocked using the public key or the MAST. This is another sigwit variant but the thing is that it has very limited supply and however the supply being limited, it may be recirculated as long as the demand is there in the usage. So this is another interesting use case of such address type. You can find interesting use case of this in layer 2 solutions.
There are around 7 address types in the bitcoin and each one of the address type is unique in its supply for the BTC and also the use case is different. Some are obsolete over the years while some would be increasing with time. Let's see what else we can find interesting about bitcoin.