BitMEX Starts Allowing Bitcoin Withdrawals to Bech32 Addresses

BitMEX Starts Allowing Bitcoin Withdrawals to Bech32 Addresses

BitMEX announced today, December 12th 2019 that it now allows its customers to withdraw Bitcoin from their accounts using all three Bitcoin address formats which are P2PKH, P2SH, and Bech32.

BitMEX explained that Bitcoin uses three address formats in a blog post published earlier today,

Pay to Public Key Hash (P2PKH) — this was Bitcoin’s original address format; addresses begin with ‘1’, e.g. 17VZNX1SN5NtKa8UQFxwQbFeFc3iqRYhem

Pay to Script Hash (P2SH) — this format became available in April 2012; addresses begin with ‘3’, e.g. 3EktnHQD7RiAE6uzMj2ZifT9YgRrkSgzQX

Bech32 (native SegWit) — this is the native SegWit address format; addresses begin with ‘bc1’, e.g.
bc1qar0srrr7xfkvy5l643lydnw9re59gtzzwf5mdq

The firm however said that although it is now possible to withdraw to addresses in any of these three formats, customers still need to make Bitcoin deposits using the “Pay to Script Hash” (P2SH) format due to their “multi-signature wallet solution.”

According to BitMEX, the advantages of using the Bech32 address format are:

“More efficient use of blockweight (and therefore lower fees)”
“Improved error detection”
“More efficient QR codes”

BitMEX says that the main benefit of Bech32 is that it can deliver reduced transaction fees. The firm explained:

“Therefore this upgrade will not directly result in fee savings when customers withdraw from BitMEX, however in the next transaction, when the bitcoin already withdrawn from BitMEX is spent again, our customers may benefit from lower transaction fees.”

On where the savings come from:

“When spending from a non-native address using SegWit, one must add around 20 bytes of overhead. When using native SegWit-style addresses (Bech32), this overhead is no longer necessary. The absence of this overhead generates the savings.”

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