In the Trezor ecosystem, which includes both the Trezor hardware wallet and the Trezor Suite software, users have a range of Bitcoin account types to choose from. These account types have different features and characteristics, and understanding them is important for effective cryptocurrency asset management.
There are three main types of standard Bitcoin accounts in the Trezor ecosystem: Legacy, SegWit, and Native SegWit (also known as Bech32).
- Segwit Bech32: By default, Trezor Suite uses a Segwit address (P2WPKH, encoded as Bech32), which always begins with the characters bc1q. This type of address is now widely supported and can prevent problems when transacting with an exchange or service that does not yet properly support Taproot. It is more efficient in how it uses data to complete a transaction than older addresses.
A Segwit Bech32 address looks like this:
- Legacy SegWit P2SH-P2WPKH: Segwit is still not supported everywhere. A hybrid version of Segwit was created to make the script readable as both a ‘pay to script hash’ (P2SH) as well as a ‘pay to witness key hash’ (P2WPKH), now known as a Legacy SegWit (P2SH-P2WPKH) address encoded in base 58. This can be more efficient than the legacy address type, from a fee point of view, and can be identified because it starts with the number 3. If you are unsure if the address you want to send to supports SegWit or not, a Legacy Segwit address will most often work.
A Legacy SegWit P2SH-P2WPKH address looks like this:
- Legacy P2PKH If you are sending from an older wallet, you may be using the original ‘pay to public key hash’ (P2PKH) address, known as a legacy address because they are seen as a remnant of earlier technology. These are generally more expensive with regards to fees, but are still fairly common. You can tell if an address is a legacy address because it starts with the number 1.
A Legacy P2PKH address looks like this:
Taproot is a more recent upgrade to the Bitcoin protocol that provides additional benefits. Trezor and Trezor Suite are fully compatible with Taproot.
- Taproot accounts (addresses start with "bc1p"): Taproot combines the Schnorr signature scheme with MAST (Merklized Alternative Script Tree) and a new scripting language called Tapscript. It enhances privacy by making all transactions look the same to external observers. It also improves scalability and efficiency.
A Taproot Bech32m address looks like this:
- CoinJoin accounts in Trezor are Taproot accounts: Coinjoin is an optional tool that enhances privacy in bitcoin transactions: when bitcoin users conduct transactions with one another using coinjoin, they obscure the origins and destinations of the funds, greatly enhancing their privacy.
Each of these account types comes with its strengths and considerations. Depending on your needs for speed, efficiency, and privacy, you might prefer one type of account over the others.
Keep in mind, the safety of your cryptocurrencies heavily depends on how securely you store your recovery seed and handle your device and software security.