Bitcoin Improvement Proposals – What Are They and Why Do They Matter? — Innovation Center for Retail Technology

What are BIPs?

A Bitcoin Improvement Proposal (BIP) is the standard method used to promote improvements, changes, or other modifications to the Bitcoin protocol.

It’s a format document developers create to introduce new processes or features to the blockchain, and it can target anything from development processes and community standards to consensus rules within the protocol.

Since we are talking about a decentralized network, i.e. no managers and third party intermediaries to validate transactions, a BIP aims to provide development and update coordination within the community.

However, the proposals presented by developers to community members need approval. They are usually reviewed by other reputable Bitcoin developers, who will further vote on their implementation. After being published on the Bitcoin Core GitHub repository, a BIP is subject to multiple analyses.

It is important for consensus contributors to show whether or not they support a particular BIP. Signaling is the most important method in this regard – a process where miners show whether they are for or against a new BIP. If the majority of participants vote in favor of the proposal, an activation phase follows.

Types of BIPs

These upgrades can range from a code simplification and a change to the algorithm to a bug fix. For example, the first Bitcoin Improvement Proposal (BIP 001) was presented by Amir Taaki, a British-Iranian programmer who wanted to explain how a BIP works.

That happened in 2011 – several other upgrades have been proposed since then. These can be classified as follows:

Standard BIPs

These types of BIPs are aimed at bringing changes to blocking or transaction validation methods or to the network protocol itself. They determine standards that Bitcoin software uses, such as exchanges and wallets, and propose changes to how it works.

In order for these to be approved, consensus is required in society. Among the things they aim to improve, the most prominent is interoperability between the two versions of the network’s protocol.

Information interface

As their name also suggests, these BIPs have an educational role only. They provide support information and general guidelines on various matters, including design issues. But they are not aimed at changing the protocol – they just offer suggestions on how things can be improved.

Thus, there is no need for community consensus – it does not matter whether the participants take them seriously or not. BIP 001 is a BIP of this type.

Process BIPs

Also called consensus BIPs, process BIPs are intended to change a process and, just like standard BIPs, cannot be completed without universal consensus. Although they often involve changes outside of the protocol, they require community consensus to be activated.

Notable BIPs

As previously mentioned, BIP 001 was the first implemented BIP. It was intended to provide information on how a BIP should work, and also establish structure and format for all proposals to come. The most notable examples include:

Segregated witness

Segregated Witness, or SegWit, was introduced at the Scaling Bitcoin conference seven years ago. It was outlined in several proposals, including BIP-91, BIP-141 and BIP-148, and aimed to change the way transactions work for users.

A common problem at the time was the ability to change transaction IDs, which could lead to asset theft and transaction malleability.

Well, SegWit promised to solve it all. Successfully adopted in 2017, BIP fixed transaction malleability and allowed participants to develop a layer 2 solution that would change everything we know about the Bitcoin blockchain – the Lightning Network.

Markelized abstract syntax tree

Another important proposal is the Markelized Abstract Syntax Tree or MAST. This enhancement idea was outlined in two notable BIPs, namely BIP-116 and BIP-117, and aimed to allow complex datasets to be added to Bitcoin transaction data.

As a cryptographic tool at its core, MAST made it possible to determine important data while minimizing the amount of data needed to be recorded on the Bitcoin network.

Tapioca

Taproot is undeniably the most notable improvement to the Bitcoin blockchain – and the most recent to happen. Software developer Greg Maxwell proposed it in 2018 but wasn’t published until 2021, so why did it take so long to be approved?

That’s because it included a set of meaningful changes that community participants needed to carefully analyze, including allowing complex transactions with multiple signatures.

And while this BIP came with many privacy-enhancing benefits, it still had to go through several difficult tests. It was outlined in BIP-340, BIP-341 and BIP-341 and was a real achievement for the entire Bitcoin network.

Which soft-fork BIPs could become a reality in the next few years?

Now that you’ve learned a little about BIPs, you’re probably wondering if any other future proposals are about to happen. And although nothing is certain, experts still have hope that the so-called Bitcoin Covenants and Drivechains will be implemented.

These will allow users to choose how to spend Bitcoin after a transaction is completed, as well as send, create, receive and delete Bitcoin from other layers.