Bech32

Bech32 is the address format introduced for bitcoin by BIP 173 in 2017 to encode native SegWit addresses, the ones beginning with bc1q. Designed by Pieter Wuille and Greg Maxwell, it uses a 32-character lowercase alphabet and a mathematically rigorous checksum in place of the older Base58 format.

Why it matters

Address formats are bitcoin's user interface for receiving money, and Bech32 improved every dimension at once. Being single-case, it encodes into denser QR codes and can be read aloud without ambiguity. Its checksum, built on BCH error-correcting codes, is guaranteed to detect any error of up to 4 characters and can even point to the likely location of a typo, far stronger protection than Base58Check offers. Spending from native SegWit addresses is also cheaper, since witness data receives a fee discount.

How it works

A Bech32 address has three parts: a human-readable prefix, bc for the bitcoin mainnet, a separator character 1, and a data section encoding the witness version and the payment hash in the 32-character alphabet, ending in a 6-character checksum. The checksum is computed over the whole string as a polynomial in a finite field, which is what gives the format its provable error-detection guarantees. A subtle weakness discovered later, where inserting or deleting characters before a final p could go undetected in certain cases, was fixed by the Bech32m variant that Taproot addresses now use.