Crypto
2 min read

BIP (Bitcoin Improvement Proposal)

A formal design document proposing a change to Bitcoin — to the protocol, conventions, or processes. BIPs go through community review and discussion before potential implementation. The model inspired EIPs on Ethereum.

How BIPs work

Anyone can author a BIP. The document follows a defined template — abstract, motivation, specification, rationale, backwards compatibility, reference implementation — and gets submitted to the BIP repository on GitHub. After community discussion and revision, BIPs are assigned a number and a status (draft, active, accepted, rejected, deferred, withdrawn, replaced, final).

A BIP being "final" doesn't mean it's automatically deployed. It only means the spec is locked. Whether nodes actually adopt the change depends on miner and node-operator coordination, often through "soft fork" or "hard fork" activation processes (BIP 9, BIP 8 are themselves the activation rules).

Notable BIPs

A few that shaped Bitcoin:

  • BIP 32 — hierarchical deterministic wallets. The reason a single seed phrase can derive an entire tree of addresses.
  • BIP 39 — the 12 or 24 word mnemonic phrase standard. Almost every modern wallet uses it.
  • BIP 44 — multi-account hierarchy on top of BIP 32, letting one seed support multiple coins.
  • BIP 141 / 143 / 144 / 145 — SegWit. Activated August 2017. Allowed transaction signatures to be moved out of the main block, increasing effective capacity and fixing transaction malleability.
  • BIP 340 / 341 / 342 — Taproot. Activated November 2021. Added Schnorr signatures and improved privacy and efficiency for complex script types.

Why this process matters

Bitcoin has no foundation, no CEO, no formal governance. Its development is coordinated through informal processes including the BIP repository, the Bitcoin Core developer mailing list, and the open-source maintainership of Bitcoin Core itself. There's no vote and no authority that can force a change through.

The result is conservative by design. Changes to Bitcoin require enough buy-in from enough constituencies (miners, full-node operators, exchanges, wallet developers, large holders) that the bar is genuinely high. Some critics see this as ossification; defenders see it as the appropriate level of friction for global monetary infrastructure.

Comparison to EIPs

Ethereum's EIP process was modeled on BIPs and follows a similar structure. The cultural difference is pace: Ethereum upgrades regularly through hard forks driven by accepted EIPs, with new features arriving every year or so. Bitcoin upgrades much more rarely. SegWit (2017) and Taproot (2021) are the major changes of the last decade.