Ledger device - Bitcoin segwit vs native segwit

[privacyn3on]

Hello,

I use Bitcoin core wallet to store my Bitcoins. Now I want to transfer some of them to Ledger hardware wallet. I installed the BTC app on the Ledger hardware wallet and during the setup, it gives me an option to choose one of the following when I try to create an account on Ledger wallet:

BTC segwit
BTC native segwit

Questiosn:

Which one should I choose, segwit or Native segwit?
Does latest version of Bitcoin core wallet support sending transactions to a Native segwit address?

I just want to use Bitcoin.

[jackg]

You can use whichever you like.

Native segwit used to be less compatible a few years ago but if anyone doesn't accept it now they probably have a MASSIVE delay for security patches and bug fixes so it's probably not a good idea to use them.

The nested segwit is better for compatibility but has higher fees
Native segwit has lower fees but may suffer compatibility issues (with withdrawals it mostly used to be).

[HeRetiK]

Here's a compatibility list for reference:

https://en.bitcoin.it/wiki/Bech32_adoption

Pretty much every wallet can send to Bech32 (= native segwit) addresses these days and almost all exchanges allow you to withdraw to a native segwit address. If for some reasons you have to deal with an exchange that doesn't support native segwit yet you might be better off with a non-native segwit address (P2SH, the addresses starting with 3) for better compatibility. If that doesn't worry you, go for native segwit.

[Abdussamad]

native

also the other one is likely p2sh segwit. they are all bitcoin addresses

[The Cryptovator]

You can create both wallets. I am using Ledger and installed Bitcoin apps with Native SegWit and Nested SegWit as well. So, wherever you want to accept funds you are free to do. If you accept BTC into the native SegWit address then you can spend it with low fees compared with other addresses. But from a few exchanges, you can't withdraw funds into native SegWit, then you have to use nested SegWit. That means, wherever you need the receiving address, choose the appropriate address accordingly.

You may read difference between native and nested SegWit address here:https://www.ledger.com/academy/difference-between-segwit-and-native-segwit

[privacyn3on]

Thanks for all the useful replies everyone.

Since Native Segwit addresses (Bech32) use lower fee as compared to Segwit addresses, then would it make sense to ask the online merchants to provide a Native Segwit address for accepting payment instead of a Segwit address?

That way, customers can complete the transaction by paying less fee and the online merchants benefit by enriching customer's experience.

As an exercise, I went through all the past payments I have made with the Bitpay app for different online merchants who accepted Bitcoin. And I noticed that most of them had provided me an address which began with either "1" or "3" which indicates legacy and segwit addresses respectively.

This also explains the fact that I often received a "high network fee" warning from the Bitpay app while making some of these payments.

[HeRetiK]

Since Native Segwit addresses (Bech32) use lower fee as compared to Segwit addresses, then would it make sense to ask the online merchants to provide a Native Segwit address for accepting payment instead of a Segwit address?

For you as the customer it doesn't really matter. The fee only applies to the sender, so if you send from a native SegWit address you save on fees no matter whether you send to another Bech32 address, a P2SH SegWit address or a legacy address.

[privacyn3on]

Since Native Segwit addresses (Bech32) use lower fee as compared to Segwit addresses, then would it make sense to ask the online merchants to provide a Native Segwit address for accepting payment instead of a Segwit address?

For you as the customer it doesn't really matter. The fee only applies to the sender, so if you send from a native SegWit address you save on fees no matter whether you send to another Bech32 address, a P2SH SegWit address or a legacy address.

Interesting, in that case, it would make sense to have Native Segwit addresses in Bitpay wallet to save on the fee I am spending when I send transaction to another address?

Any idea if Bitpay supports Native segwit address in their wallet by default?

I checked and found that they added support in Bitpay wallet to allow sending to Native segwit addresses

https://bitpay.com/blog/bitpay-open-source-segwit/

[ranochigo]

Since Native Segwit addresses (Bech32) use lower fee as compared to Segwit addresses, then would it make sense to ask the online merchants to provide a Native Segwit address for accepting payment instead of a Segwit address?

You can try but it does have some downside. There are several services that are still incompatible with Bech32 addresses (god knows why) so it'll be wise to use a P2SH Segwit Address for better compatibility. I presume some of the services actually offer both and toggles between the types of addresses which would be great.

either "1" or "3" which indicates legacy and segwit addresses respectively.

Addresses starting with 3 merely indicates that it is a P2SH (Pay-to-Script-Hash) address, it does not necessarily contains a witness script wrapped inside.

This also explains the fact that I often received a "high network fee" warning from the Bitpay app while making some of these payments.

Probably not. There shouldn't be any noticeable difference when you're paying to a legacy or a segwit address.

Interesting, in that case, it would make sense to have Native Segwit addresses in Bitpay wallet to save on the fee I am spending when I send transaction to another address?

Yes.