What is a Bitcoin Improvement Proposal and Why Does It Matter?

What is a Bitcoin Improvement Proposal?

It is a proposal to change Bitcoin. Bitcoin is a digital entity that has continued to incorporate various upgrades in order to fix bugs, increase network efficiency, increase compatibility with other networks, and some new features. Bitcoin is a decentralized project meaning that it has a democratic process to approve changes in the program.

It means that Bitcoin stakeholders case vote to approve any new updates on the forum. The process of creating proposal, sharing with the Bitcoin network participants, and voting is called Bitcoin Improvement Proposal (BIP).

How to Create a Bitcoin Improvement Proposal (BIP)?

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Bitcoin does not have a centralized leadership therefore it needs to ensure trust among network participants as a digital financial ledger. On this account, the process of creating a draft for update, transform it into a BIP, and approving it is a deliberately lengthy process.

Bitcoin is an open-source protocol which means that anyone can submit an improvement proposal. Investors can start a new proposal by positing at a Bitcoin forum such as email list such as IRS and Slack etc.

In this manner, all network participants are able to view it and have the option to submit their feedbacks. There are many ideas that remain under discussion topics for years on account of lack of consensus or unsuitable timing.

However, once a proposal has collected detailed information and addressed technical details, it gets a BIP number. In the next stage, this proposal is posted at the Bitcoin Code GitHub repository of BIPs. However, it is still not approved or lined up for implementation.

How is a BIP Approved?

Bitcoin GitHub library contains BIPs listings. From there it is discussed by the developer community and investors. If the proposal requires programming changes, developers write the code and run tests before integrating it. Alternatively, a BIP is rejected or withdrawn if a network contributor raises a viable concern.

On the contrary, if the community reaches a consensus without any warranted objections the community promotes the BIP to activation phase. The process of implementation has various phases depending on the complexity of the BIP in question.

Types of Bitcoin Improvement Proposals (BIPs)

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BIPs can result in changes in the consensus mechanism for the network called forks.  The community standard for BIP promotes interoperability among Bitcoin-based programs.

BIPs can also be a procedural guideline. BIPs have a broad scope that covers all aspects related to the network therefore there are many types of BIPs:

Consensus BIPs

Bitcoin network is based on internal regulations that are elected and implemented by independent nodes. All nodes must maintain a consensus in order to establish a governance rule and maintain order. Therefore, consensus BIPs are created in a way to remain compatible with archived standards of network governance.

Therefore, nodes do not adopt new models to remain full members of the Bitcoin network. Consensus changes require activation on Bitcoin network with various BIPs enroute to activation paths to bring new consensus changes.

SegWit Update

SegWit is one of the consensus updates that have made changes to the Bitcoin rulebook. It is the BIP 141 proposal which is a description for witness field for Bitcoin transactions and two new script types namely P2WPKH and P2WSH.

Since BIP 141 requires approval from Bitcoin nodes therefore it is a consensus BIP.

Standard BIPs

Standard BIPs do not propose changes to the core code of Bitcoin but offer standardized regulations that Bitcoin software can adhere to. This type of proposal can include products such as wallets and exchanges that are presented as encoding schemes that are best for securing the network.

Bitcoin is an open-source network therefore the developers on the platform can independently choose to access or decline these standards. BIP39, BIP142, and BIP174 are all elective or standardized proposals.  

Process BIPs

Process BIPs are created as a result of forum discussions among Bitcoin investors and other stakeholders. They do not bring any changes to the Bitcoin core. BIP1 and BIP2 define the lifecycle and course of evolution for BIPs and standardization for their activation process.


BIPs play an important role in the development process of the blockchain network and bring more transparency for the members. At the same time, they are necessary to keep ensure decentralization and open network.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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