The Four Epochs of Bitcoin Addresses

Every Bitcoin user interacts with addresses, but few pause to consider how deeply these alphanumeric strings have evolved. What began as a single format — the humble Pay-to-Public-Key-Hash (1... address) — has branched into a family of four distinct types, each representing a major protocol upgrade. By tracing the on-chain migration of address types from 2009 to 2026, we gain a unique archaeological window into Bitcoin’s technological maturation and its community’s willingness to adopt change.

Bitcoin’s address evolution spans four epochs, each defined by a soft fork activation:

Each epoch introduced new functionality — multisig scripting, witness discount efficiency, Schnorr signature aggregation — but also carried a migration cost. Users, exchanges, and wallet providers had to update software, and the on-chain record shows exactly how fast (or slow) each transition occurred.

Epoch I: P2PKH — The Original (2009)

In Bitcoin’s first three years, there was only one address type: Pay-to-Public-Key-Hash, starting with 1. Every transaction output locked coins to a 1... address, and every wallet generated them. Approximately 12.5 million BTC were mined during this period, and nearly all early UTXOs — including those attributed to Satoshi Nakamoto — are encapsulated in P2PKH outputs.

The 1... address encodes a 160-bit hash of the recipient’s public key (RIPEMD-160 of SHA-256), secured by the ECDSA signature algorithm on the secp256k1 curve. Its simplicity was both a strength and a limitation: straightforward to implement but incapable of expressing conditional spending logic beyond a single signature.

By 2011, the ecosystem recognized the need for more flexible scripting. The first multisig transactions were constructed using bare scripts (raw scriptPubKey), but these were cumbersome, bloated UTXOs, and placed the scripting burden on the sender rather than the receiver.

Epoch II: P2SH — Multisig Goes Mainstream (2012)

The Pay-to-Script-Hash (P2SH) address, starting with 3, was activated via BIP 16 soft fork at block 173,805 on April 1, 2012. P2SH fundamentally changed Bitcoin’s scripting model: instead of the sender specifying the full redemption script, the sender only needed to know the script hash. The receiver provided the full script at spending time.

This was transformative for multisig security. Exchanges could now use 2-of-3 multisig wallets without exposing their internal key structure on-chain at deposit time. The P2SH address also enabled the first generation of Bitcoin sidechain pegs, atomic swaps, and early Lightning Network channel constructs.

P2SH adoption was gradual. Exchange support arrived between 2013-2015, and by the 2017 bull market, 3... addresses represented roughly 20-25% of new transaction outputs. Today, P2SH outputs account for an estimated 8-12% of the UTXO set by value, with most concentrated in exchange cold wallets and older multisig arrangements.

Epoch III: Bech32 — SegWit and the Witness Discount (2017)

The Segregated Witness (SegWit) soft fork, activated at block 481,824 on August 24, 2017, introduced Bitcoin’s most consequential address format upgrade. The Bech32 address (BIP 173), starting with bc1q..., was designed from the ground up with several improvements:

1. Human-readable error detection: Bech32 uses a BCH checksum that detects up to 4 errors in an address and can even suggest corrections
2. Case-insensitive QR-friendly encoding: All lowercase by convention, but the encoding is case-insensitive
3. Witness discount: Transaction data stored in the “witness” section receives a 75% weight discount (1 weight unit instead of 4), reducing effective transaction fees by 35-40%

The SegWit adoption curve is one of the most instructive in Bitcoin’s history. Initial uptake was slow — many exchanges and wallets hesitated, and by late 2017 fewer than 10% of transactions used SegWit. The turning point came in 2019-2020 when major exchanges (Coinbase, Binance) enabled native SegWit withdrawals, and the fee spikes of the 2020-2021 bull market made the 35-40% savings impossible to ignore.

By mid-2026, Bech32 outputs dominate the UTXO creation landscape. An estimated 55-65% of new outputs use native SegWit, driven by universal wallet support and the compounding fee advantage. The bc1q... prefix has become the default for Bitcoin users worldwide.

Epoch IV: Bech32m — Taproot and the Schnorr Era (2021)

The Taproot soft fork, activated at block 709,632 on November 14, 2021, introduced Bech32m addresses (BIP 350), starting with bc1p.... Taproot brought three major innovations:

• Schnorr signatures (BIP 340): Faster verification, native key aggregation, and signature batch validation
• MAST (Merklized Alternative Script Trees): Complex spending conditions are hashed into a Merkle tree, revealing only the executed branch on-chain
• Tapscript: An updated scripting language with new opcodes for covenants and improved efficiency

Taproot’s adoption trajectory tells a fascinating story. In its first year (late 2021 to late 2022), Taproot usage languished below 2% of transactions — the ecosystem was still digesting SegWit migration. But in early 2023, the Ordinals protocol discovered that Taproot’s witness space could store arbitrary data (inscriptions), triggering an explosion in Taproot usage. By Q2 2023, Taproot transactions surged past 40% during inscription peaks, though the base level (excluding inscriptions) settled around 15-20%.

By mid-2026, Taproot adoption has matured to approximately 30-35% of transactions on a sustained basis, with Bech32m addresses becoming the preferred format for new wallet deployments and Ordinals-related activity.

The Compositional Shift in Numbers

The on-chain migration pattern across 17 years reveals a striking compositional shift in UTXO output types:

The table reveals a critical archaeological insight: legacy P2PKH addresses still hold an outsized share of the UTXO set by value (approximately 35%), even though they represent fewer than 5% of new outputs. This is the vintage coin effect — early-mined BTC, much of it dormant, remains locked in its original 1... address format, frozen in the technological amber of Bitcoin’s first epoch.

The UTXO-by-count share for P2PKH (~28%) exceeds its new-output share by a factor of 5-6x, confirming that these older coins are disproportionately inactive. This is consistent with supply hardening models that show UTXO mobility rates declining exponentially with coin age.

What the Migration Reveals About Bitcoin Governance

The address type migration is more than a technical curiosity — it is a real-time record of Bitcoin’s social governance. Each transition required overwhelming consensus among miners, node operators, exchanges, and wallet developers. The fact that all four soft forks deployed without contention speaks to the community’s shared understanding of what constitutes an improvement.

However, the speed of adoption varied dramatically. P2SH took 5-7 years to reach mainstream usage. SegWit took 3-4 years. Taproot reached 30%+ within 4 years, accelerated by an unexpected use case (Ordinals). This acceleration pattern suggests that Bitcoin’s upgrade absorption rate is improving as the ecosystem matures — but also that exogenous factors (like inscription-driven demand) can dramatically alter adoption trajectories in ways no BIP author anticipated.

For the on-chain archaeologist, Bitcoin’s address format migration offers a unique lens: each UTXO carries not just a value and an age, but a technological fingerprint — a record of the protocol era in which it was created. In a very real sense, 1... UTXOs are digital fossils from the pre-multisig era, 3... UTXOs from the first great exchange-security wave, bc1q... UTXOs from the efficiency revolution, and bc1p... UTXOs from the Schnorr-enabled future.

The Bitcoin blockchain doesn’t just record transactions. It records technological history, one address prefix at a time.

— Encryption Archive · AeonD.org