Reading Time
~ 5 minutes
Spread the Word

If you’re a Bitcoin aficionado, then there’s a good chance you’ve heard of a term called “BIP.” The term stands for Bitcoin Improvement Proposal, and it entails to any improvement to the Bitcoin ecosystem.

Why are BIPs important?

Bitcoin Improvement Proposals are extremely important for a platform such as Bitcoin for numerous reasons. The main reason why there are important is represented by the fact that BIPs greatly contribute to ensuring and even improving Bitcoin’s dominance on the market. Interestingly, anyone from anywhere in the world can come up with proposals for a BIP.

Of course, it’s up to the Bitcoin community at large (its users, miners, developers, and investors to vote and decide whether or not the proposal should be implemented). Any BIP can lead to a fork in the Bitcoin network. BIPs are useful for proposing new features, for collecting community input on various issues, and for documenting the design decisions that went into Bitcoin’s platform.

BIP process cycle

The process of approving or rejecting a BIP is as follows: first, a public discussion takes place to confirm that the proposition is indeed worth considering. Next, if the proposition is considered, it is sent to the mailing list of Bitcoin’s developers, and ultimately added to the Git repository for BIPs. The final decision is in the hands of the miners running the full nodes. If the BIP receives a majority vote, then it will be implemented in the Bitcoin network.

History of BIPs

The first ever Bitcoin Improvement Proposal was submitted on the 19th of August, 2011 by one Amir Taaki. This first BIP is code-named BIP 0001 and defines what a BIP is, what are its purposes, and why it is useful for the Bitcoin environment.

Types of BIPs

As suggested in BIP 0001, there are three important types of Bitcoin Improvement Proposals: Standard Track BIP, Informational BIP, and Process BIP.

The first type of BIP takes into consideration all the changes which could potentially affect all the implementations of the Bitcoin Network. The second type, the informational BIP, is more of a document that brings forward information on important matters regarding the Bitcoin network. the last type of BIP is similar to the standard track BIP, but it only covers the changes and matters that don’t technically change the codebase of Bitcoin. It’s used for any type of other proposals that need community consensus.

The most important BIPs

In the second half of this article, we will look at some the most important BIPs to have shaped the history of Bitcoin. These include the Lightning Network, the introduction of confidential transactions, and the Merkelized Abstract Syntax Trees.

The Lightning Network

It’s almost a common fact that even though Bitcoin is a very ingenious project that worked flawlessly on paper, has been struggling with scalability issues for quite some time now. In 2015, Joseph Poon and Thaddeus Dryja proposed the addition of the Lightning Network to Bitcoin’s ecosystem. The Lightning Network’s main goal is to make Bitcoin more scalable and its transactions a lot faster by moving small and payments off-chain.

The Lightning Network has yet to reach its true potential, and it’s made possible by the introduction of multi-signature wallets where anyone can conduct an infinite number of transactions. What’s important to note here is that these transactions do not require their details to be stored on the blockchain. The only information recorded on the blockchain is the amount of Bitcoins a wallet holds. The Lightning Network was eventually implemented as a soft fork.

Confidential transactions

The main purpose of this BIP is to make transactions on the Bitcoin blockchain a lot more private, despite potential government regulations. Ever since the SegWit update (another BIP), it is now possible to introduce confidential transaction on the Bitcoin network via a soft fork. Before SegWit, the addition of confidential transactions to Bitcoin would have required a hard fork. The successful implementation of confidential transactions would enable Bitcoin to compete with the so-called privacy coins out there (best examples are Monero and Zcash).

Merkelized Abstract Syntax Tree

M.A.S.T. is a cryptographic tool that enables the addition of complex data sets into the data associated with transactions on the Bitcoin blockchain. Another benefit of M.A.S.T is the fact that while it adds data, it also reduces the amount of data that needs to be recorded on the blockchain.


There are various BIPs that aim to add M.A.S.T. to the Bitcoin network such as BIP 114, 116, and 117. The first one was created by Bitcoin core developer Johnson Lau, while the other two have been proposed by Bitcoin core developer Mark Friedenbach. The successful implementation of M.A.S.T would eventually lead to faster transactions, bigger transaction volumes, increased privacy, and the inclusion of complex data sets to the Bitcoin network (smart contracts, for example).


Even though Bitcoin Improvement Proposals have seen their fair share of criticisms over the years, there’s no denying their importance within the Bitcoin ecosystem. There are some that argue that these BIPs can and will eventually lead to more forks in the network which is generally considered to be a bag thing in the cryptocurrency community at large. Nevertheless, if not anything else, BIPs are one of the most important examples of community-driven evolution.

Read more articles related to this subject:
Notice: The information in this article and the links provided are for general information purposes only and should not constitute any financial or investment advice. We advise you to do your own research or consult a professional before making financial decisions. Please acknowledge that we are not responsible for any loss caused by any information present on this website.