The SegWit Bitcoin addresses
You should have heard about segwit bitcoin addresses. As you know legacy addresses are standard bitcoin addresses that begins with 1 as starting number. These addresses are the most used at the moment of this article 2018 but have some problems (transaction expensive and not so fast for example). Segwit is a scaling solution that have been implemented through a soft fork in 24th august 2017. This is a new kind of address format available on blockchain which starts with digit 3 and is a “multi signature address” P2SH that can be used also to wrap the segwit. The use of such addresses has a lot of advantages, some of them are:
- best signature optimization;
- possibility of future optimizations in the network;
- reduction of transaction fees;
so a more fast and efficient address for your bitcoin transactions. For those reasons is becoming more and more interesting to start using to this new kind of addresses. There is also native segwit (addresses starting with bc1) that are the most moderns and which fees are lower.
Wallets that have implemented segwit
Many wallets have already implemented segwit:
- Ledger Nano S
- Edge (AirBitz rebranded)
- Samourai Wallet
Procedure for converting legacy->segwit on Ledger nano
In this article we will cover how to change your standard legacy bitcoin address to segwit (wrapped into p2sh) in your ledger nano S wallet. Infact suppose you have all your bitcoins with a standard legacy account on your ledger wallet and you want to move them to the new segwit account. As previously told, ledger is ready for segwit. Here How to do
First of all 1) connect your ledger and open your bitcoin app. 2) Choose bitcoin, then choose segwit address. A window will open and you will see zero amount (because your btc are in legacy address) and the segwit address (starting with 3).
3) Now copy the segwit address and write it down on a text document, then exit the ledger nano app.
4) At this point reopen the bitcoin ledger nano app, choose bitcoin and now choose legacy address. Now the usual window will open, showing the total amount of bitcoin held into the legacy address. Now click on send. Fill the form setting the amount you want to convert and where address is asked, paste the previously copied segwit address. Now specify the amount of fees and click send. Please note that this is a real transaction on the blockchain therefore it implies fees and time to be completed.
When transaction will be complete, you will be able to reopen bitcoin app with segwit address and see there the amount you transferred from the legacy address, voilà. Now you can enjoy the bit advantages of segwit address functionalities from your ledger nano S hardware wallet.
The same procedure can be done also with destination address as bech32 (native segwit) even if it is still not completely supported by all the exchangers for example.