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Since Bitcoin is powered by a blockchain system, it is important that developers keep the main functionality of the code components maintained, resolving any reported bugs in the system or providing it with proper upgrades to achieve greater overall efficiency.

A Bitcoin improvement proposal (BIP) is basically a standardized technique which focuses toward bringing new and unique designs and enhancements to Bitcoin, mainly in the form of a formalized paper, proposing future advancement for Bitcoin’s internal systems. A bitcoin improvement proposal has the power to bring change towards almost anything in the system that includes consensus regulations, community standards or development steps.

Since Bitcoin is not powered by a centralized authority, its development and advancements are dependent around the community that is interested and passionate about its success. In normal centralized systems, it is the job of managers or the higher ups to make decisions on improvements or upgrades to any systems, but in the case of Bitcoin, the system is mostly open source, meaning that it does not have to depend upon the decisions of a single entity leading it, so it must rely on its community to do that job.

Looking back in time, Bitcoin’s first ever improvement proposal was proposed by a programmer named, Amir Taaki back in the year 2011, which was almost two years after Bitcoin showed its existence in the world, who basically introduced the concept of Bitcoin improvement proposal. Because of its decentralized nature, any individual capable enough to understand Bitcoin’s systems effectively and propose new advancements is allowed to submit this formal document.

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One thing to note is that Bitcoin still isn’t fully developed, and it is still working hard to keep its presence relevant in the global financial system, making sure that the system is robust and secure for individuals to take advantage of. Another thing to note is that, as seen with time, Bitcoin’s upgrade and enhancement process is generally very tedious and slow, meaning that bringing a major change to the network can take a lot of time.

Players worthy to propose changes

Since Bitcoin doesn’t have an owner and is open source, it is mostly powered by its community. The Bitcoin community generally consists of passionate individuals all around the world who are supportive of Bitcoin’s goals. That includes, software developers, Bitcoin miners and normal users as well.

Although changes from developers and miners might be preferred in general, however any talented worthy individual can propose a change and gain support for it in the community, which is basically the main beauty of this network. Everyone in the community has an equal chance, if their idea is clear and has proper logical reasoning behind it.

Formation of a Bitcoin Improvement Proposal

Bitcoin improvement proposal generally originate from informal idea sharing techniques via either meetups, social media platforms or organized forum sites. Popular ones include, CryptoTwitter, email services or instant messaging services like Slack or Telegram. The main advantage of this type of informal idea sharing is that any irrelevant or useless ideas can be excluded and be filtered before the formation of an official formal document to be submitted. There will be no point of submitting a formal document which contains changes that are not following the generalized development standards issued by the development team.

It is important that each Bitcoin improvement proposal is formed properly and follows the standards to save both time and resources. As mentioned before, the process from proposal submission to change implementation is very long, so proposers should be very careful and watchful in their work. A way of increasing the chances for an improvement proposal to be get accepted is by first discussing it with the community around, since many talented individuals can provide their viewpoint on the proposal, helping it to improve.

This gives anyone a chance to become popular in the community if the individual can come up with a proposal that follows the writing and development standards, while also being engaged with by the community. A Bitcoin improvement proposal should only focus on major changes, because small fixes or improvements can be completed during the development life cycle.

Because there can be a plethora of ideas, difficult or lacking ideas can be present in forums for a long time, because of multiple reasons such as the community might not understand it, the idea needs more tuning, or the Bitcoin system is currently not accepting any improvement proposals.

A Bitcoin improvement proposal is required to be written in a standardized BIP format and should include technical information that is clearly understood and should have proper logical reasoning behind the proposed change. It is the job of the BIP champion to forward the proposed idea and develop an understanding for it, by making sure to respond to feedback.

If a proposal is finished and verified by the community and main editor successfully, a unique BIP number is then attached to it by the editor on the proposal, registering it as a BIP and is then shifted from the BIP draft list and uploaded on Bitcoin’s Core GitHub repository, where other registered BIPs are located, however even if the BIP might be officially registered, its approval or integration still needs to be completed before it can enter the system.

Before the BIP can be tested, its functionality must be reviewed. Progress of a BIP can also be tailed using a status checking feature. If there is no progress regarding the proposal in a timespan of three years, then the BIP is usually marked as rejected.

Implementation of Bitcoin Improvement Proposals

Bitcoin in its core, is a combination of three factors, software, hardware and energy resources, while the governance is taken care of mostly using the code. Anyone who drives a node is compliant towards the regulations regarding the code.

Previously mentioned multiple times, Bitcoin is not powered by any central entity because of it being open source and decentralized, so it means that future enhancements and upgrades are not decided by a single lead. It is the community’s job to make sure that the protocol stays up-to-date and relevant in the system, by submitting Bitcoin improvement proposals.

The reason behind the lengthiness of the process of development of Bitcoin is to make sure that all features are fulfilling their goals effectively and security levels remain intact, so to ensure that, Bitcoin’s core system must be regularly maintained.

Bitcoin also follows the Proof-of-Work consensus mechanism that needs a lot of processing power and a large energy source to make sure that its decentralized blockchain is fully secure to support transactions and network additions. In this mechanism, miners are challenged with solving complex mathematical problems and the one who solves a problem first gains a chance to update the blockchain with completed trades and is then awarded with a certain amount of cryptocurrency.

But not every change requires a Bitcoin improvement proposal to be processed and approved. For example, if the community wants a change in the user interface, that does not require an improvement proposal.

These BIPs are usually implemented to promote any major upgrades which have a significant impact on the overall performance of the system. Major upgrades can include new trade types or consensus change like going from Proof-of-Work to Proof-of-Stake.

Process of getting a Bitcoin Improvement Proposal Approved

Gaining the understanding of the community is the first key to the door of approval. As mentioned before there is a possibility that even the best of ideas can take a long amount of time, even years, before gaining approval, just because of the reason that the community is not able to fully understand the idea or the reasoning behind it.

If the BIP manages to enter the BIP GitHub repository, it requires another review process in which anyone can perform tests on it and track its approval status. Because the blockchain behind Bitcoin is driven by code, it is important that the proposed change be in line with the code, plus Bitcoin miners will be required to include a refence to a hashed block, indicating whether they approve or reject the change.

Because of the strong bases that code carries in blockchain, any proposed change in code is to be understood and have an approval percentage of around or more than 95%. To better understand this, we can take the example of BIP 341, formally known as the Taproot soft fork. Early last year, a quick “trail code” was utilized to provide a decision to that advancement, leading to the Taproot advancement bring fused with Bitcoin’s core systems.

Following that event, around 90% of the total 2,016 blocks mined contained a reference, highlighting that the Bitcoin miners in charge of mining those blocks were happy with the enhancement, leading to an excellent level of understanding and finally achieving an approval status later that same year.

After gaining approval status, users (also known as node drivers) are required to update to the latest software version that supports that implemented change to process trades using the updated protocol.

In short, any talented individual can submit a change proposal, the proposal must gain the approval from the chief editor, after testing the BIP must gain approval from 95% of miners and finally the community is required to updated to the latest version of the software to process trades.

Types of Bitcoin Improvement Proposals

Some types can bring forth major forks, some promote changes to the followed standards, meant to develop connections with more utilities, networks and systems, while some are developed with the intent of bringing change to process regulations and every single one of these BIPs are taken care of in a different manner. Currently there are three main types of Bitcoin improvement proposals:

  • Standard BIPs

Standard BIPs are usually used to highlight the standards that followed by Bitcoin utilities including Bitcoin wallets or cryptocurrency exchanges that are focused towards bringing significant enhancement into the protocol.


However, these types of BIPs must be agreed upon by entities for it to gain approval status. Examples include new and fresh encoding techniques and best practices for security or gaining compatibility with a new utility, for the utility to be able to connect and operate in parallel with the blockchain and in line with the standards.

Some of these standards are to be forcefully adopted by utilities like wallets to ensure their cross compatibility, because if a wallet service is unable to properly process a Bitcoin address and uses a format that does not follow standard, then it will not work as intended, leaving users confused and frustrated about their trading activities not being accepted.

But some standards like BIP 39 and BIP 174 are designed in way that they become optional, however it is considered as unsuitable since not everyone will be updated by the new standards, so it might influence compatibility.

  • Consensus BIPs

Almost homogeneous to standard BIPs, these BIPs (also known as forks) focus towards bringing change to a certain process or series of steps but must also seek agreement even if the changes are well out of the main Bitcoin protocol. Consensus BIPs must be directly triggered on the Bitcoin network protocol to be implemented as intended.

Since Bitcoin is controlled by certain rules and regulations, it is important that these rules are fully understood and agreed upon by the thousands of Bitcoin nodes. If two or more sides follow different rules, then the network will not function the way as intended and will most likely fail in that case.

Consensus BIPs are very strict towards backwards compatibility and must be designed in such a way that supports past consensus. This means that nodes who have decided not to update can remain a part of the network.

Consensus is a concept that defines the communication and agreement between entities in a decentralized environment. Consensus is usually made on the development point that is inline with the changes to the Bitcoin protocol or with respect to the condition of the blockchain.

An example for this can be the SegWit update, which was a significant consensus BIP that held information on the witness field and two fresh scripts formally codenamed as, P2WPKH and P2WSH. Agreement was done by nodes in the system to integrate it.

Its purpose was to re-secure diverse trade support and assist the scaling of the Bitcoin network, while also contributing towards the introduction of the Lightning Network, which is basically a layer-2 decentralized payment protocol, present on Bitcoin that utilize smart contracts functionality to not only bring quick payments for users spread across the network, but also help reduce costs associated to the blockchain and enable off-chain transactions onto Bitcoin.

  • Informational BIPs

Unlike the other two BIP types, informational BIPs have only a single motive that is focused on information. They are used to provide and spread specific instructions into the community and are not used to bring major changes code changes to the Bitcoin system, so no sort of collective agreement is required for them to be implemented.


Examples include BIP 1 and BIP 2 bringing change to the development cycle and format of BIPs. BIP 8 and BIP 9 are known as the two major BIPs of Bitcoin that highlight the processes for triggered soft forks into the Bitcoin consensus.

Although they are not to be confused with consensus BIPs, they mainly highlight changes into the consensus itself, basically setting the rules on how consensus-based enhancements are to be integrated into the Bitcoin network and helping to eliminate any uncertainties and any disruptions in the system.


In conclusion, Bitcoin improvement proposals (BIPs) are a vital part of Bitcoin’s development and are a great way of bringing enhancements and advancements to the system, helping Bitcoin to maintain its number one position in the cryptocurrency market, without being administered by a single lead and being maintained by a passionate community that seeks the overall success of Bitcoin’s systems.

Not only that, BIPs help to streamline the development life cycle and processes of Bitcoin, while maintaining complete transparency on the changes and features, driven by massive community, letting it keep its nature of being decentralized and open to anyone. Bitcoin’s development team might be small, however the nodes on the network are the ones who really provide the power to run this massive system, with any worthy individual having the chance to become a node.

Having the support of the community as several different advantages. Nowadays, since forums exists, consultation about anything is basically  considered to be free, so effectively engaging with the community assures that the standards and regulation requirements are being met, promotes diverse ideas and suggestions regardless of outcome, help to gain more information, promote better understanding, identify problems and issues that were not considered by the author of the proposal and lead to better problem-solving capacity, not only verifying the potential of the proposal, but also helping it to gain better acceptability and chances of approval.

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Nathan Ferguson

By Nathan Ferguson

Nathan Ferguson is a talented crypto analyst and writer at Herald Sheets, dedicated to delivering comprehensive news and insights on the ever-evolving digital currency landscape. With a strong background in finance and technology, Nathan's expertise shines through in his well-researched articles and thought-provoking analysis. He holds a degree in Economics from the University of Chicago, and his passion for cryptocurrency drives him to stay up-to-date with the latest industry trends and developments.