Bitcoin Improvement Proposal (BIP)

What Are Bitcoin Improvement Proposals?

A bitcoin improvement proposal (BIP) is the standard method to propose new features and changes to the bitcoin blockchain.

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Public blockchains like bitcoin (BTC) depend on BIPs to propose, discuss and implement new ideas and technical changes since there is no centralized leadership.

Anyone can initiate a BIP, however the proposed changes are first vetted and approved by the bitcoin community.

Why Bitcoin Improvement Proposals Exist

BIPs are at the core of bitcoin’s development. They are systems that allow organized problem-solving in an open and decentralized network. BIPs also serve as the primary mechanisms for collecting community inputs and documenting community decisions.

Every upgrade that the bitcoin network has seen in the past decade started as a BIP. Some upgrades were implemented to increase the bitcoin block size, while others have been aimed at reducing gas fees on the bitcoin network. Informational BIPs are also published to provide guidelines to the bitcoin community.

BIPs introduce new features that can enhance the user experience, increase transaction throughput, and bolster security measures. This dynamic evolution ensures that bitcoin remains adaptable to changing technological landscapes and user needs.

How do BIPs work?

Theoretically, since bitcoin is open and decentralized, anyone can propose a BIP platform.

However, your chances of seeing your BIP successfully implemented will depend on the soundness of your proposal and the community support behind it. The BIP author is responsible for building consensus and documenting opinions.

BIP-0001, the first improvement proposal for the bitcoin blockchain, was filed by Indian-British programmer Amir Taaki in September 2011 and lays out the standard method and rules for filing a BIP.

BIP-0002 went on to replace BIP-0001 as the main guidelines for BIPs.

Here is how the BIP process takes place:

  1. The BIP process begins with the author (also known as the BIP champion), who comes up with a new feature of the bitcoin blockchain.
  2. The BIP author will send their idea to the bitcoin development mailing list. This step is taken to see whether there is any chance of acceptance for the BIP.
  3. If the idea is acceptable, the author will present a draft BIP to bitcoin development mailing list. A draft BIP is a formal document that provides technical specifications and a rationale for the feature.
  4. The draft BIP is then submitted to the BIPsGitHubb repository.
  5. A BIP editor will assign a BIP number to the proposal and will label it as ‘Standards Track,’ ‘Informational,’ or ‘Process.’
  6. The status of the BIP will change between ‘Draft’, Active, ‘Deferred’, ‘Withdrawn’, ‘Rejected’ and ‘Final’ depending on the progress made.

According to the guidelines, authors are advised to create BIP with a “single key proposal” in order to elevate their chances of getting approved by the community. Reasons for BIP rejection include broad topics, duplication of effort, technical issues, and not addressing backwards compatibility.

Types of BIPs

Let’s learn about the three types of BIPs to understand the definition of bitcoin improvement proposals better:

  • Standards Track BIP

Standards Track BIPs are proposals that affect most or all bitcoin implementations. These BIP will include proposals that make changes to the network protocol and changes to block or transaction validity rules.

  • Informational BIP

An informational BIP does not propose a new feature. These BIPs provide guidelines or information to the community. It should be noted that informational BIPs do not always represent the bitcoin community consensus. The community is free to ignore informational BIPs or follow their advice.

  • Process BIP

A process BIP is a proposal that looks to make changes to areas other than the bitcoin protocol. Examples of process BIPs include changes to procedures and guidelines, decision-making processes, and tools or environments used in bitcoin development.

Examples of Bitcoin Improvement Proposals: SegWit and Taproot

  • SegWit upgrade

The SegWit upgrade was a major bitcoin upgrade implemented in 2017 to help scale the bitcoin network.

Bitcoin was originally designed with one megabyte (MB) blocks created every 10 minutes. As the network grew, the limited block space became a major constraint, as the 1 MB blocks could only accommodate a small number of transactions in a block.

SegWit made the bitcoin blockchain more scalable by moving digital signatures outside of transaction data, which reduced the storage size of each transaction. SegWit also replaced block size limits with block weight limits, which ultimately increased the number of transactions a bitcoin block can hold.

  • Taproot upgrade

The Taproot upgrade was composed of three BIPs (BIP-340, BIP-341, and BIP-342) that were implemented in November 2021.

With BIP-340 and BIP-341, the Taproot upgrade implemented the use of Schnorr signatures in bitcoin. Schnorr signatures replaced a signing method called ECDSA that bitcoin has historically used. The introduction of Schnorr signatures introduced trustless multi-signature setups, better privacy, and lower fees for the end user.

The Bottom Line

Bitcoin Improvement Proposals are the backbone of bitcoin’s development and drive innovation in the bitcoin community through collaborative efforts and diverse perspectives within an open system.

Whether you’re a developer, investor, or simply intrigued by the world of cryptocurrencies, understanding BIPs provides a profound insight into the evolution of this groundbreaking technology.

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Mensholong Lepcha

Mensholong is an experienced crypto and blockchain journalist, now a full-time writer at Techopedia. He has previously contributed news coverage and in-depth market analysis to Capital.com, StockTwits, XBO, and other publications. He started his writing career at Reuters in 2017, covering global equity markets. In his free time, Mensholong loves watching football, finding new music, and buying BTC and ETH for his crypto portfolio.