Legacy address

Legacy addresses have worked unchanged since the first bitcoin release in January 2009, and every wallet and exchange still accepts them. They are also the most expensive format to spend from: one legacy input takes about 148 vbytes against about 68 for a native SegWit input. If your coins sit at a 1 address nothing is wrong, but every future withdrawal quietly costs you roughly twice the fee.

How it works

A legacy address is a compact encoding of one hash. Take the 33-byte compressed public key, run SHA-256 over it, run RIPEMD-160 over that result, and you have a 20-byte fingerprint. Put a version byte of 0x00 in front, append the first four bytes of a double SHA-256 over those 21 bytes as a checksum, and encode the finished 25-byte package in Base58. The version byte is what forces the leading character to be 1, and the string that comes out runs 26 to 35 characters, almost always 34.

Base58 drops four symbols from the usual alphanumerics: zero, capital O, capital I and lowercase l. That removes the pairs people confuse when reading a string aloud or copying it off a screen. What it does not remove is case sensitivity, so a legacy address transcribed in the wrong case is a different address, and its QR code has to use byte mode, which packs the pattern more densely than the bech32 equivalent.

The address is shorthand for a locking script. A sender's wallet expands it into OP_DUP OP_HASH160 <20-byte hash> OP_EQUALVERIFY OP_CHECKSIG, 25 bytes written into the transaction output. When you later spend, the signature and the public key go into the input's scriptSig, where every byte is counted at four weight units against the 4,000,000 unit block budget. No part of a legacy input is discounted, and that is the entire source of the cost difference.

Two pieces of history are worth knowing. The genesis block, mined on January 3, 2009, paid its 50 BTC coinbase to a bare public key rather than to a hash, and the famous string 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa is the legacy address derived from that key. Those particular coins cannot be spent, because the genesis coinbase was never added to the set of spendable outputs.

Why this matters when you buy bitcoin

The address you paste into an exchange withdrawal form sets your fees for years, and the choice is yours rather than the platform's.

Two different fees get mixed up here. The exchange charges a withdrawal fee, normally flat per transaction whatever the amount or format. The network charges you separately and later, when you spend those coins yourself, and that bill depends on how many inputs you hold and what type they are. Withdrawing to a 1 address hands you an expensive input. Withdrawing to a bc1q address hands you a cheap one, at no extra cost on the day.

Check the withdrawal screen before you fund an account. Our exchange reviews cover which platforms focus on bitcoin only and how their withdrawal setup works, and the signal to watch for is a form that offers Base58 formats and nothing else. A platform that has not touched its address handling since 2017 is telling you something about its engineering, and it is holding your money while it does so.

If your wallet is old, your coins are already legacy. A paper wallet printed in 2014, an early Electrum file, a hardware wallet configured on its first firmware: all of them default to the 1 format. Nothing is at risk and there is no deadline. The only decision is when to pay for the move.

What consolidating an old legacy stash actually costs

Picture twelve separate 1 addresses, each holding a small amount left over from years of small buys, and a plan to gather them into one modern address.

Twelve legacy inputs and one native SegWit output make a transaction of roughly 1,817 vbytes: about 148 for each input, 31 for the output, and 10 for the version, counters and locktime. At 6 sat/vB that is close to 10,900 satoshis. Had those same twelve coins been sitting in bc1q outputs, the identical transaction would run about 858 vbytes and cost about 5,150 satoshis. The saving comes from the format, not from the tidying up.

Two cautions apply. Fee rates move, and the same transaction at 60 sat/vB costs roughly 109,000 satoshis, so this is work for a quiet mempool rather than a busy afternoon. And a consolidation is a privacy event: merging twelve inputs announces that one person controls all twelve, which can undo separations you deliberately kept.

Legacy address vs P2PKH address

Legacy address and P2PKH address describe the same string from two angles, differing only in scope. P2PKH names the output script precisely, so it always means a 1 address. "Legacy" names an era, and in casual use it gets stretched to cover Base58 strings beginning with 3 as well, since those are equally old-style and equally case sensitive. If someone says their exchange supports legacy addresses only, ask whether they mean 1 alone or 1 and 3, because the answer changes what you are able to withdraw to.

Legacy address vs Nested SegWit

Nested SegWit addresses look legacy and are not. They share the Base58Check encoding and the case-sensitive alphabet, but they begin with 3, and the coins behind them are witness outputs, so spending one takes about 91 vbytes rather than 148. A platform that advertises SegWit support and then hands you a 3 address is offering the middle option: cheaper than legacy, dearer than bc1q, compatible with almost everything. Judging by the first character alone will mislead you in the other direction too, because a 3 address might just as easily be a multisig vault.