Bitcoin Forum

Bitcoin has 3 types of address starting with 1, 3 and bc1 and they are defined as Legacy and Segwit. What I know is segwit consumes less data and as a result it is good for fee. But what other things are making it better? Why or why should not we use Legacy or Segwit?

There are more transactions can be compressed with Segwit, per block, but to say which type of address is better for users, it can not be answered directly. I meant the answer depends on each user and it should be called as personalized answer for users' interests that in turn depend on platforms they choose to use.

Some platforms accept Segwit while some others don't but there are more and more platforms accept Segwit and more wallets support that type of address.

Take a look at campaigns run on the forum, some accept all types, some require Legacy only, and some others require Segwit only.

I arranged the three types based from my preferences (usage and fee criteria):
Actually, there are more. The other '3-prefix' address types are "P2SH multisig address" and other "P2SH scripts" for specific purposes.
And not worth mentioning: the older "non-address" outputs.

Best, Better & Good, in exact order (for me):

• 1. SegWit [P2WPKH-P2SH] '3' address - Because it's compatible with most exchange, payment processors, services, etc. while still benefits from SegWit's features.
  The tx size may be higher than native SegWit but the compatibility is what makes it my most preferred address type.
• 2. Native SegWit [P2WPKH] 'bc1' address - Because it's "SegWit" (as you/others described it)
• 3. Legacy [P2PKH] '1' address - IMO, if your client/wallet supports P2SH Segwit, use it since there's no real advantage on using legacy address instead of 3-SegWit anymore.

that is such a broad and possibly even wrong question you are asking here. there is no such thing as "better address type" in bitcoin. while we are at it, we don't have "address types" we have script types some of which have corresponding addresses.

each address serves a different purpose and based on your needs and the tools you have at your disposal you and up choosing a certain type. for example if you were using a secure wallet that didn't support script-hash type scripts such as P2SH or P2WSH then you can't use them and have to stick to P2PKH and P2WPKH types.
for example 2 years ago when SegWit came out and you were using bitcoin core you (as a regular user) could not use P2WPKH (bech32 address starting with bc1) easily because it was not supported by default.

another example, if you wanted to use smart contracts such as locking funds with a OP_CheckLocktimeVerify you can't use an address barbecue there is no "address" defined for such a script. you could put it in a redeem script and use hash of it in which case you have 3 choice: P2SH, P2WSH, and P2WSH-P2SH. again it comes down to tools you have at your disposal. your only option (as a regular user) is going to be P2SH even though P2WSH could be a lot "better"!

if some service today is not recognizing bech32 address format then you should not be using that service because it means they have NOT upgraded their system for at least 2.5 years.

no wallet cares where the coins come from. in other words ALL wallets accept bitcoin coming from SegWit addresses or any other output type for that matter.

Native SegWit is better for reduce transaction fee, but problems is most of exchanges and platforms do not support it. But all of them support nested SegWit also fees lower than Legacy address when you will make transactions from. Also depend on which clients or wallet you are using. Like Electrum doesn't support nested Segwit starting with '3' on the other hand Ledger doesn't support native SegWit. For me since I am using Ledger nano so I am using nested SegWit wherever necessary to use SegWit address.

Electrum doesn't support the creation of P2SH addresses but you can import the seed in Electrum wallet and use the Segwit addresses starting with '3'. All you have to do is to tick the 'BIP 39' checkbox from menu while importing the seed and it will work.

We have talked in more detail about addresses and how to send money and create transactions. I hope everyone re-read this topics ---> How Bitcoin transactions work and what are their types? (https://bitcointalk.org/index.php?topic=5183979.0).
The information may not be simple for beginners, but it is better to surround all the information even with a few details.
The "Bettter address" is loose flatterer, and we need to redefine the word "better."
If you are not interested in the fees, using [P2WPKH] Native SegWit addresses is best. else, starting with SegWit [P2WPKH-P2SH] & Legacy [P2PKH], according to the needs.