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Bitcoin Best Practices: Wallet Dust Limits & Address Types
Bitcoin Best Practices: Wallet Dust Limits & Address Types

All you need to know about Dust Limits & Wallet Types

Alphonse avatar
Written by Alphonse
Updated over a week ago

What is Bitcoin Dust?

Bitcoin dust represents minuscule amounts of unspent bitcoin in a transaction that falls below the minimum limit required for processing. This leftover amount, trapped in a wallet or address, poses challenges to transaction validation. Bitcoin dust, can also involve small cryptocurrency amounts sent to numerous wallet addresses. This can either be benevolent or potentially malicious.

Understanding Bitcoin Dust

Transactions on the Bitcoin network demand validation through mining, with miners earning fees for their service. Bitcoin dust arises when the mining fee exceeds the actual transaction value, rendering the transaction impossible.

Understanding Bitcoin Wallet Address Types

There are 4 main Bitcoin wallet types, and they all serve different purposes and have different 'dust limits'. The 'dust limit' of a wallet sets a boundary on the smallest UTXO size (in sats) a wallet can contain, safeguarding users against dust attacks.

Wallet Type

Legacy

Native Segwit

Nested Segwit

Taproot

Wallet Script Type

P2PKH

P2WPKH

P2SH-P2WPKH

P2TR

Address Starting with

1

bc1q

3

bc1p

Dust Limit

546 sats

294 sats

540 sats

330 sats

  1. Legacy addresses were the original Bitcoin address format.

  2. Nested & Native Segwit addresses are commonly used as Payment Wallets.

  3. Taproot Wallets are optimized and used for Ordinal Wallets - To store inscriptions, Rare Sats & Runes.

The Wallet Address Types Used on Magic Eden Wallet

By default, Magic Eden Wallet uses a Native Segwit (starting with bc1q) to store your spendable Bitcoin, and a taproot address (starting with bc1p) for inscriptions, ordinals or rare sats. This provides a clear segregation between your spendable Bitcoin and ordinal inscriptions.

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