Bitcoin Improvement Proposal Meaning

Oct 9, 2023 | Updated Mar 18, 2024

Bitcoin Improvement Proposal (BIP) is the standard documentation format for proposing changes to the Bitcoin network.

Bitcoin Improvement Proposal Defined

A Bitcoin Improvement Proposal (BIP) is a formal document that allows Bitcoin users to suggest changes, ideas, and upgrades to the Bitcoin blockchain. A BIP can include proposals for changes in the blockchain’s consensus rules or guidelines on certain procedures on the network. Some BIPs do not aim to impact the Bitcoin network directly; instead, they propose updates for Bitcoin software, like wallets.

Satoshi Nakamoto built Bitcoin to operate in a completely decentralized manner as an open-source, cryptocurrency blockchain. There is no hierarchical leadership structure in place, so BIPs are the only way for developers to introduce updates to the blockchain through consensus.

Programmer Amir Taaki proposed the first BIP (BIP 0001) in 2011, two years after Bitcoin’s launch. This inaugural BIP set the format for how subsequent BIPs should be created. This BIP and all other subsequent BIPs are publicly available on GitHub.

Types of BIPs

There are three categories of Bitcoin Improvement Proposals: Standard BIPs, Informational BIP, and Process BIP.

Standard BIPs are proposals that affect most of Bitcoin’s functionality, such as validating transactions. Informational BIPs are mostly guidelines and educational proposals, and they do not have to be adhered to by community members. Process BIPs propose changes outside the Bitcoin protocol.

To create a BIP, users send their proposals to the Bitcoin email list or any communication medium like Slack, forum chats, or even Crypto Twitter. When other developers on the network reach an agreement on the wording of the proposal, it will be assigned a BIP number and the BIP becomes official. This stage may take several years, and still requires approval from nodes (also called miners) on Bitcoin before it can be implemented. Over 95% of the miners on the blockchain have to approve a BIP before it can be implemented.

The Segregated Witnesses (SegWit) upgrade on Bitcoin in 2017 began as BIP 141. BIP 141 proposed major upgrades to the Bitcoin network that increased the scalability of the network.

To learn more about Bitcoin Improvement Proposal check out this article on Ledger Academy.