Wrapped SegWit

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Wrapped SegWit is a design implementation included in the SegWit upgrade meant to enable wallets and other Bitcoin software to more easily support SegWit. In order to achieve this, the two native SegWit scripts, P2WPKH and P2WSH, are used as the “redeemScript” of a P2SH transaction, yielding wrapped SegWit script types of P2SH-P2WPKH and P2SH-P2WSH respectively.

This design allows older wallets which do not support SegWit to send to SegWit outputs as long as they support sending to P2SH addresses. Users who receive bitcoin to wrapped SegWit addresses are still able to save on transaction fees by using the Witness field, albeit to a lesser extent than if they use native SegWit scripts.

Like all P2SH addresses, wrapped SegWit addresses will begin with a ‘3’ and use Base58 encoding, whereas native SegWit addresses will begin with a ‘bc1’ and use Bech32 encoding.