A bech32 Bitcoin address is a Segregated Witness (SegWit) address format which was integrated with the Bitcoin Improvement Proposal (BIP) 0173. The bech32 format, or “bc1 addresses,” begin with the alphanumeric characters bc1 and is made up of lowercase letters, which removes the need of case-sensitive characters.
This new type of address format reduces the chances of errors due to typing and, as a result, it will improve transaction malleability. SegWit also increases the maximum block size limit, which comes with a higher processing capacity for transactions and reduced fees.
Bitfinex points out that the introduction of bech32 addresses demonstrates its willingness to further SegWit adoption and to also improve the scaling and overall development of Bitcoin.
According to the company, Bitfinex users will have to choose to use either the original Pay to Script Hash (P2SH) SegWit deposit address or native SegWit bech32 address, as the bech32 format is not supported by all the exchanges.
Bitfinex also implied that it will be adding support for the Lightning Network (LN) in the near future. Bitfinex’s CTO, Paolo Ardoino, posted in tweet on November 4th, suggesting that LN might be the “Little Nice” thing they want to implement:
“Now there is only one Little Nice thing left for us to develop…”
Featured image: BitcoinExchangeGuide.com