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What are BIPs?

Understand what BIPs (Bitcoin Improvement Proposals) are: proposal process, implementations, famous examples like SegWit and Taproot. Advanced technical guide on Bitcoin technical governance.

Published on November 27, 2025
#bitcoin#bips#governance#proposals#segwit#taproot#advanced

What are BIPs?

Introduction

BIPs, or Bitcoin Improvement Proposals, are the formal mechanism through which improvements, standards, and changes are proposed, discussed, and implemented in Bitcoin. Understanding BIPs is fundamental to understand how Bitcoin evolves, how technical decisions are made, and how Bitcoin's technical governance works.

This guide will explain what BIPs are, how the proposal process works, how they are implemented, famous examples of BIPs that changed Bitcoin, and the role BIPs play in Bitcoin network's technical governance.

Important: This is an advanced level guide. We assume basic knowledge of blockchain, Bitcoin protocol, and technical concepts. If you're a beginner, we recommend first understanding Bitcoin basics before advancing to this content about technical governance.

By the end of this guide, you'll understand how BIPs work, how proposals are made and implemented, and how this process keeps Bitcoin decentralized and evolving consensually.

What Are BIPs?

Basic Concept

BIP (Bitcoin Improvement Proposal) is a formal document describing a proposal for improvement, standard, or change in Bitcoin protocol.

Main characteristics:

  • Formal document: Structured and well defined
  • Technical proposal: Describes changes or improvements
  • Standardized: Follows specific format
  • Open: Anyone can propose
  • Reviewed: Goes through review process

Purpose:

  • Propose technical improvements
  • Document standards
  • Facilitate discussion and consensus
  • Coordinate implementations
  • Maintain history of changes

Analogy:

  • Like RFCs (Request for Comments) of the internet
  • Like Python's PEPs
  • Formal format to propose and document improvements

History of BIPs

Origin:

  • Modeled after PEPs (Python Enhancement Proposals)
  • First BIP (BIP 1) defined BIP process
  • Created by Amir Taaki in 2011
  • Inspired by open source software processes

Evolution:

  • Process refined over years
  • Many important BIPs proposed and implemented
  • Central tool in Bitcoin's evolution

Types of BIPs

BIPs are categorized into types:

1. Standards Track BIPs:

  • Changes to Bitcoin protocol
  • Affect interoperability
  • Require network consensus
  • Examples: SegWit, Taproot

2. Informational BIPs:

  • Information and guidelines
  • Don't require code changes
  • Documentation and education
  • Don't affect protocol

3. Process BIPs:

  • Changes to BIP process
  • Changes in procedures
  • Governance of process
  • Example: BIP 1 (defines BIP process)

Proposal Process

How a BIP Is Created

Step 1: Idea and Draft:

  • Someone has improvement idea
  • Writes initial draft
  • May discuss informally first
  • Researches similar existing BIPs

Step 2: Write Formal Proposal:

  • Follows standard BIP format
  • Includes: summary, technical specification, motivation, compatibility
  • Reference code (if applicable)
  • Examples and use cases

Step 3: Submit for Discussion:

  • Submits to Bitcoin development mailing list
  • Publishes in BIP repository
  • Provisional numbering (draft)

Step 4: Feedback and Review:

  • Community reviews and comments
  • Developers give technical feedback
  • Revisions and improvements made
  • Iteration until proposal is ready

Step 5: Final Status:

  • May be accepted (Accepted)
  • May be implemented (Implemented)
  • May be rejected (Rejected)
  • May be superseded (Superseded)
  • May remain as draft (Draft)

BIP Format

Typical structure:

BIP: [number]
Title: [proposal title]
Author(s): [name(s)]
Type: [Standards Track / Informational / Process]
Created: [date]
Status: [Draft / Proposed / Active / Accepted / Rejected]

## Summary
Brief description of proposal.

## Motivation
Why is this change necessary?

## Technical Specification
Technical details of implementation.

## Compatibility
Impact on existing systems.

## Implementation
Reference code (if applicable).

## References
Links and related documents.

Important fields:

  • Title: Clear and descriptive name
  • Author(s): Who proposed it
  • Type: BIP category
  • Status: Current state of BIP

Review Process

Who reviews?:

  • Bitcoin Core Developers: Technical review
  • Community: Feedback and discussion
  • Miners: For consensus changes
  • Users: For changes affecting users

Evaluation criteria:

  • Technical viability: Is it possible to implement?
  • Security: Doesn't introduce vulnerabilities?
  • Compatibility: Compatible with previous versions?
  • Necessity: Solves real problem?
  • Consensus: Is there community support?

Process is not hierarchical:

  • No "leader" who approves
  • Community consensus necessary
  • Developers can implement or not
  • Nodes can adopt or not

Implementations

How BIPs Are Implemented

1. Standards Track BIPs:

Process:

  • BIP is accepted by community
  • Code is developed and reviewed
  • Implemented in Bitcoin Core (or other software)
  • Extensively tested
  • Activated through soft fork or hard fork

Soft Fork:

  • Compatible with previous versions
  • Old nodes still work
  • Example: SegWit, Taproot

Hard Fork:

  • Not compatible with previous versions
  • Requires updating all nodes
  • Rarely used (consensus is difficult)

2. Informational BIPs:

  • Don't require code implementation
  • Are documentation and guidelines
  • Implemented through voluntary adoption

3. Process BIPs:

  • Change governance process
  • Adopted by community consensus
  • Don't require code changes

BIP Activation

Activation methods:

1. User-Activated Soft Fork (UASF):

  • Users signal support
  • Nodes update to new version
  • Activates when majority of nodes support

2. Miner-Activated Soft Fork (MASF):

  • Miners signal support
  • Activates when majority of miners support
  • More common historically

3. Combined:

  • Combination of user and miner signaling
  • Majority of both necessary

Example: Taproot:

  • Activated November 2021 (block 709,632)
  • Soft fork
  • Combined signaling
  • Broad community consensus

Adoption and Deployment

After activation:

  • BIP is active on network
  • Nodes can use new features
  • Wallets and services can implement
  • Gradual adoption over time

Example: SegWit:

  • Activated August 2017
  • Gradual adoption over years
  • Majority of transactions now use SegWit
  • Broad wallet and service support

Famous Examples of BIPs

BIP 1: BIP Process

Link: BIP 1

What it is: Defines the process of creating and maintaining BIPs.

Importance: First BIP, establishes how all other BIPs work.

Status: Active

BIP 32: Hierarchical Deterministic Wallets

Link: BIP 32

What it is: Defines hierarchical deterministic (HD) wallets.

Importance: Allows generating infinite keys from one seed phrase. Used by virtually all modern wallets.

Benefits:

  • One seed phrase for all keys
  • Simpler backup
  • Wallets organized hierarchically

Status: Standard

BIP 39: Mnemonic Seed Phrases

Link: BIP 39

What it is: Defines mnemonic words for seed phrases.

Importance: Allows representing seeds as human-readable words (e.g., "abandon ability able about..."). Used by almost all modern wallets.

Benefits:

  • Easy to write and memorize
  • More secure than hexadecimal strings
  • Universal standard

Status: Standard

BIP 44: Multi-Account Hierarchy

Link: BIP 44

What it is: Defines hierarchical structure for multiple coins and accounts.

Importance: Allows one seed phrase to manage multiple coins and multiple accounts. Used by wallets supporting multiple cryptocurrencies.

Structure: m / purpose' / coin_type' / account' / change / address_index

Status: Standard

BIP 141-143: SegWit

Link: BIP 141, BIP 143

What it is: Separate witness data (signatures) from transaction body.

Importance: One of most important Bitcoin upgrades. Reduces transaction size, allows more transactions per block, and prepares ground for future upgrades.

Benefits:

  • Smaller transactions (~40% reduction)
  • Lower fees
  • Prepares for Lightning Network and other upgrades
  • Mitigates transaction malleability

Activation: August 2017 (block 481,824)

Status: Active

BIP 340-342: Taproot

Link: BIP 340, BIP 341, BIP 342

What it is: Protocol upgrade including Schnorr signatures, MAST, and Tapscript.

Importance: One of most recent and important upgrades. Dramatically improves privacy, efficiency, and flexibility.

Benefits:

  • Much improved privacy (everything looks the same)
  • Improved efficiency (smaller transactions)
  • More flexible scripts with MAST
  • Aggregated Schnorr signatures

Activation: November 2021 (block 709,632)

Status: Active

BIP 84: Native SegWit (P2WPKH)

Link: BIP 84

What it is: Defines derivation path for native SegWit (P2WPKH).

Importance: Allows wallets to use native SegWit addresses (starting with "bc1"). More efficient than SegWit in P2SH.

Benefits:

  • Lower fees
  • Better privacy
  • Direct SegWit support

Status: Standard

BIP 173: Bech32 Addresses

Link: BIP 173

What it is: Defines Bech32 address format for SegWit.

Importance: Creates address format starting with "bc1" for SegWit. More efficient and with better error detection.

Benefits:

  • Improved error detection
  • Case-insensitive
  • More efficient format

Status: Standard

BIP 86: Taproot Single Key Spending

Link: BIP 86

What it is: Defines derivation path for Taproot single key spending.

Importance: Allows wallets to use Taproot for simple transactions. More efficient version of P2PKH transactions.

Benefits:

  • Lower fees than P2PKH
  • Better privacy
  • Taproot support

Status: Standard

Bitcoin Technical Governance

How Decisions Are Made

Bitcoin has no central authority:

  • No Bitcoin "leader"
  • No company controlling
  • Decisions are decentralized

Consensus process:

  • Developers: Propose and implement
  • Miners: Validate and signal support
  • Users: Adopt or not updates
  • Nodes: Execute code and validate rules

Consensus is not perfect:

  • There can be disagreements
  • Different groups may have different opinions
  • Process can be slow
  • Requires coordination among many parties

Role of Different Groups

1. Bitcoin Core Developers:

  • Maintain main code
  • Review and implement BIPs
  • Make technical decisions
  • Don't control network, but influence greatly

2. Miners:

  • Validate transactions and blocks
  • Signal support for soft forks
  • Can choose to run different code
  • Influence adoption of changes

3. Users and Nodes:

  • Choose which software to run
  • Can reject changes
  • Ultimately decide what Bitcoin is
  • Real power through software choice

4. Community:

  • Discusses and debates proposals
  • Reviews BIPs
  • Gives feedback and support
  • Influences development direction

Governance Challenges

Main challenges:

1. Coordination:

  • Coordinate many independent parties
  • Communicate changes effectively
  • Align diverse interests

2. Consensus:

  • Reaching consensus is difficult
  • Requires much time and discussion
  • Not always clear consensus

3. Controversies:

  • Changes can be controversial
  • Different visions may conflict
  • There can be community divisions

4. Slow Process:

  • Process can be very slow
  • Changes take years to activate
  • May frustrate some

Why Process Works

Despite challenges, process works because:

1. Decentralization:

  • No one controls alone
  • Requires real consensus
  • Prevents bad changes

2. Transparency:

  • Everything is public and open
  • Discussions are visible
  • Process is auditable

3. Careful Iteration:

  • Changes carefully reviewed
  • Extensive testing
  • Gradual activation

4. Conservative Inertia:

  • Bitcoin changes slowly
  • Bad changes hard to implement
  • Stability is valued

BIP Status

States of a BIP

Possible statuses:

1. Draft:

  • Initial draft
  • Still under discussion
  • Not finalized

2. Proposed:

  • Formally proposed
  • Awaiting feedback
  • May be accepted or rejected

3. Active:

  • Accepted and active
  • Can be used
  • Implemented on network

4. Accepted:

  • Accepted by community
  • Ready for implementation
  • May not yet be active

5. Rejected:

  • Rejected
  • Will not be implemented
  • May have problems or lack support

6. Superseded:

  • Replaced by another BIP
  • Obsolete
  • Should not be used

7. Withdrawn:

  • Withdrawn by author
  • Will not be further developed
  • May be relaunched later

How to Check Status

Official repository:

Explorers:

  • Sites like bip.tech list all BIPs
  • Filters by status, type, author
  • Easy navigation

Creating a BIP

Process to Create

If you want to propose a BIP:

1. Research First:

  • Check if similar BIP already exists
  • Read related BIPs
  • Understand process (BIP 1)

2. Discuss Informally:

  • Discuss idea on development mailing list
  • Get feedback before writing formally
  • See if there's interest

3. Write Draft:

  • Follow standard format
  • Be clear and complete
  • Include technical specification

4. Submit for Discussion:

  • Create pull request in BIP repository
  • Numbering will be assigned
  • Discussion begins

5. Iterate and Improve:

  • Respond to feedback
  • Improve proposal
  • Update draft

6. Seek Support:

  • Get developer support
  • Seek implementations
  • Demonstrate viability

Requirements

What you need:

  • Clear technical proposal
  • Solid justification
  • Detailed specification
  • Reference code (if applicable)
  • Compatibility considered

What helps:

  • Reference implementation
  • Tests and analysis
  • Community support
  • Clear documentation

Frequently Asked Questions

Can anyone propose a BIP?

Yes. Anyone can propose a BIP. There are no formal restrictions. But proposal needs to be technical and follow process.

How many BIPs exist?

Hundreds. Not all are implemented. Some are informational, some are drafts, some are active.

Are BIPs mandatory?

No. BIPs are proposals. Implementation and adoption are voluntary. Developers and users choose to implement or not.

How do BIPs become part of Bitcoin?

Through consensus. BIPs need to be accepted by community, implemented in code, tested, and activated on network. Process can take years.

Can BIPs be rejected?

Yes. BIPs can be rejected if they have technical problems, lack support, or other issues. Rejection is not permanent - BIP can be revised and reproposed.

What is the most important BIP?

Depends on perspective. BIP 1 is fundamental (defines process). SegWit and Taproot are very important technically. BIP 32/39/44 are fundamental for wallets.

Conclusion

BIPs are the formal mechanism through which Bitcoin evolves. They facilitate technical discussion, coordinate implementations, document standards, and maintain decentralized and transparent governance process.

The main points you need to understand are:

  1. BIPs are formal proposals - Structured documents proposing Bitcoin improvements
  2. Process is open and decentralized - Anyone can propose, consensus is necessary
  3. Implementation requires consensus - Developers, miners, and users need to agree
  4. Famous examples changed Bitcoin - SegWit, Taproot, BIP 32/39/44 are fundamental
  5. Governance is decentralized - No central authority, decisions are consensual
  6. Process is slow but safe - Careful changes prevent problems

BIPs demonstrate how Bitcoin evolves in decentralized and consensual way. Through open process, transparency, and careful consensus, Bitcoin manages to improve while maintaining fundamental stability and security.

BIP process is not perfect. It can be slow, controversial, and challenging. But it works because it's transparent, decentralized, and requires real consensus. This prevents bad changes and ensures improvements are carefully considered before being adopted.

If you want to understand how Bitcoin evolves, how technical decisions are made, or how to propose improvements, understanding BIPs is essential. It's the mechanism that allows Bitcoin to improve while maintaining decentralization and consensus that make it unique.

References and Useful Links

Official BIP repository: https://github.com/bitcoin/bips

Most important BIPs:

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