BIPs: Everything to Know

By  Beluga Research October 16, 2023

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Summary

  • Bitcoin Improvement Proposals (BIPs) are proposals to change how Bitcoin works
  • A BIP is expressed as a technical document, which is approved or rejected by the Bitcoin community
  • A BIP allows members of the Bitcoin community to collaborate on changes and ensure they are transparent
  • The five types of BIPs are standards track BIPs, informational BIPs, process BIPs, research BIPs and miscellaneous BIPs

Overview

Bitcoin Improvement Proposals (BIPs) are proposals to change how Bitcoin works. Any entity is allowed to submit a BIP. The Bitcoin community regularly votes on BIPs. A BIP is typically a soft fork, a code modification in the software that invalidates previous blocks, or a hard fork, a code modification in the software that will invalidate new blocks.

A BIP takes the form of a written document that outlines technical specifications, design considerations and implementation details for proposed changes. The proposals undergo a rigorous review process which includes community feedback, technical analysis and consensus building. The three outcomes for a BIP are acceptance, rejection and modification.

The BIP system enables collaboration, encouraging members to propose and discuss changes and enhancements to the Bitcoin network. BIPs cover a range of topics, including protocol upgrades, new features and operational improvements.

A Brief History

Satoshi Nakamoto, the anonymous entity behind the creation of Bitcoin, introduced the concept of BIPs. They introduced the first BIP, called BIP 0001, in 2011. BIP 0001 established a standardized framework for proposing improvements to the Bitcoin protocol.

Since then, other cryptocurrencies have adopted the idea of the BIP system. The open and collaborative nature of improvement proposals is helpful. It has facilitated the development of innovative features and enhancements across different blockchain networks.

BIPs: Everything to Know

Standards Track BIPs: This type of BIP proposes changes to the Bitcoin protocol that require consensus from the network's participants. A standards track BIP is a major upgrade or modification that impacts the core functionality of the network. Standards track BIPs undergo evaluation, including community feedback and implementation tests. These ensure that the BIPs offer compatibility and reliability.

Informational BIPs: This type of BIP provides guidance, recommendations or research findings related to the Bitcoin ecosystem. Informational BIPs do not introduce new features or protocol changes. They serve as a reference for developers, researchers and users seeking additional information or knowledge of best practices.

Process BIPs: This type of BIP focuses on improving the efficiency and effectiveness of the BIP system. It suggests changes to the proposal process, documentation or governance structure. Process BIPs ensure the BIP system remains a robust and inclusive platform for collaboration.

Research BIPs: This type of BIP relates to academic studies on Bitcoin. A research BIP showcases the findings of a study and relates the study's usefulness.

Miscellaneous BIPs: This type of BIP includes BIPs that do not fit into the other categories. Miscellaneous BIPs cover topics like user interface improvements, operational guidelines and experimental features. Miscellaneous BIPs are a way to explore and test new ideas.

Getting Started

  • Allow developers and community members to suggest modifications to the Bitcoin protocol. BIPs are a way for community members to encourage all types of improvements, from small technical adjustments up to more significant changes.
  • Open the process to enable change to all members of the Bitcoin community. Each BIP undergoes a thorough evaluation based on technical merits, potential impact and alignment with the network's goals and principles.
  • Require the draft of a proposal document that describes the problem, proposed solution and potential benefits or drawbacks. Technical specifications and reference implementations should be provided if applicable. Education of members in the community helps individuals from a wide range of backgrounds gain an understanding of the process. This also encourages the submission of BIPs from a diverse group of investors.
  • Typically shared on the Bitcoin development mailing list or other community platforms. The idea is to gather feedback from stakeholders. This open collaboration allows for comprehensive evaluation of the proposal's feasibility and implications.

Unique Aspects

  • Hierarchical numbering system. Each BIP is assigned a unique number indicating its status and category. The format is BIP-XXX, where XXX represents the proposal's number. The first digit signifies the BIP's status: 1 for a draft, 2 for a proposed, 3 for an accepted and 9 for a final BIP. Subsequent digits categorize the BIP based on its nature and purpose.
  • Categories that classify proposals according to their focus area: Standards track, informational, process, research and miscellaneous. Standards track BIPs cover changes or enhancements to the Bitcoin protocol. Informational BIPs provide educational content. Process BIPs outline guidelines. Research BIPs focus on academic studies related to Bitcoin. Miscellaneous BIPs cover all other topics.
  • The decision-making process involves extensive discussion and consensus-building within the Bitcoin community . This ensures thorough evaluation and input from diverse perspectives. It maintains the decentralized and inclusive nature of the network.
  • May undergo revisions based on feedback. After discussion and review, the author of the proposal incorporates relevant suggestions and addresses concerns. This iterative approach refines the proposal. It increases the likelihood of reaching broad consensus.

Advantages

  • Innovation - BIPs encourage the community to propose and implement new ideas and features. They foster the continuous improvement and evolution of the Bitcoin network.
  • Community involvement - BIPs provide a platform for the community to actively participate in the decision-making process of the Bitcoin protocol. This ensures the collective input and expertise of the users drive the direction of the network.
  • Transparency - BIPS are open and transparent. Anyone can review proposals and contribute to them. This transparency ensures a fair and inclusive decision-making process. It prevents centralization and censorship of the Bitcoin network.
  • Security enhancements - BIPs can propose security enhancements to the Bitcoin protocol. This protects users' funds and prevents potential vulnerabilities. The rigorous review process ensures thorough scrutiny of proposed changes' impact on network security.
  • Compatibility - BIPs aim to maintain backward compatibility with previous versions of the Bitcoin protocol. They facilitate integration of new features and updates with existing applications and services built on Bitcoin.
  • Consensus-driven - BIPs require broad consensus from the Bitcoin community before implementation. This approach ensures proposed changes have widespread support. It reduces the likelihood of contentious hard forks and network splits.
  • Standardization - BIPs introduce standards and guidelines for various aspects of the Bitcoin ecosystem. They promote interoperability and consistency among different implementations and services.

Disadvantages

  • Fragmentation - The decentralized nature of BIPs can lead to fragmentation of the Bitcoin community. Disagreements over proposed changes can result in different factions supporting divergent BIPs. This can lead to network splits and the creation of multiple Bitcoin variants.
  • Slow decision-making - The consensus-driven nature of BIPs may result in a slower decision-making process. Extensive discussions and debates may be required before consensus is reached. This can delay implementation of necessary improvements and work to address urgent concerns.
  • Complexity - BIPs can introduce additional complexity to the Bitcoin protocol. They allow for the introduction of new features. The increased complexity usually makes it harder for developers and users to understand the protocol. Education, particularly to new users and a wide range of users, can help offset increased complexity.
  • Risk of introducing bugs or vulnerabilities - Despite thorough review, there is always a risk of introducing bugs or vulnerabilities. Even with extensive testing, unforeseen issues may arise. These can compromise the network's security and stability.
  • Centralization - BIPs aim to prevent centralized control. Yet influential individuals and groups in the Bitcoin community can significantly impact the decision-making process. A concentration of influence can lead to decisions that do not align with the broader interests of the community.