BIP 84 (Derivation Paths for Native Segwit)

BIP 84 is the Bitcoin improvement proposal that defines the derivation path m/84'/0'/0' for native segwit addresses, formally pay to witness public key hash (P2WPKH). These are the bech32 addresses that begin with bc1q, and BIP 84 is the default key derivation scheme in most modern bitcoin wallets.

Why it matters

Native segwit is the cheapest widely used single signature format on the network. A typical P2WPKH input weighs about 68 virtual bytes against roughly 148 for a legacy P2PKH input, so a wallet built on BIP 84 pays materially lower fees for the same activity. The bech32 encoding also carries stronger error detection than the older base58 format and is written in a single case, which reduces mistakes when addresses are typed or read aloud.

Keeping native segwit keys on their own path also protects recovery. A wallet restoring a seed knows to scan the 84' branch for bc1q addresses, the 49' branch for wrapped segwit, and the 44' branch for legacy funds.

How it works

The path follows the five level structure introduced by BIP 44: purpose 84', coin type 0' for bitcoin, an account number, a change flag, and an address index. Addresses are encoded per BIP 173 as version 0 witness programs containing the 20 byte hash of the public key, and signatures live in the witness section of a transaction, where each byte counts as one quarter of a weight unit.