Important Bitcoin BIPs : from the process to the key proposals

Bitcoin Improvement Proposals, abbreviated BIPs, are the mechanism through which Bitcoin has evolved since 2011. Amir Taaki published BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 1 that year to formalise a framework inspired by Python PEPs and IETF RFCs. Instead of a steering committee, Bitcoin uses a public process where anyone can propose a change, documented in a BIP, and adoption happens through voluntary implementation in software and miner×MinerComputer or farm of computers that solves the cryptographic puzzle required to add a new block to the blockchain, in exchange for a bitcoin reward.See in the lexicon → signaling.

The result at the end of 2026 is a corpus of over 400 BIPs. A handful structures daily life without anyone knowing : BIP 32/39/44 behind every seed phrase×Seed phraseSequence of 12 or 24 words (usually in English) that encodes your master key. Universal wallet backup : with these words, you can restore your funds on any compatible software.See in the lexicon →, BIP 21 behind every Bitcoin QR code×QR codeTwo-dimensional barcode, ubiquitous in Bitcoin: addresses, Lightning invoices, payment URIs. Always check the decoded amount and address before confirming.See in the lexicon →, BIP 174 behind every PSBT×PSBT (Partially Signed Bitcoin Transaction)Standard format (BIP 174) that lets you build a transaction on one device, sign it on another and broadcast it from a third. Backbone of the modern multisig workflow.See in the lexicon →, BIP 327 behind every MuSig2×MuSig2Schnorr signature aggregation protocol (BIP 327). Lets multiple signers produce a single signature indistinguishable from a single-signer one.See in the lexicon →. Others sit at the heart of current debates : BIP 118 ANYPREVOUT for Lightning, BIP 119 CTV for covenants, BIP 300 for Drivechains×Drivechains (BIP 300/301)Proposal by Paul Sztorc: sidechains without a federation, secured by the Bitcoin miners themselves. Highly debated in the community.See in the lexicon →, BIP 345 for OP_VAULT×VaultCustody setup for long-term storage, often multisig, kept offline and touched rarely.See in the lexicon →.

This article first explains the BIP process and its statuses, then reviews 10 structuring BIPs in two groups : those already active that you use without knowing, and those in discussion that will determine the next soft-forks. Reading for those who want to follow Bitcoin debates without depending on journalistic summaries.

The BIP process and its statuses

It all starts on the bitcoin-dev mailing list or Delving Bitcoin (the successor technical forum since 2023). Someone posts an idea, the technical debate refines it over weeks or months. If the idea holds up, the author writes a formal BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → following the template defined in BIP 2 (revision of BIP 1 by Luke Dashjr in 2016) and submits a pull request to the bitcoin/bips repository. A BIP champion (a recognised editor) assigns a number.

The BIP then goes through statuses. Draft : initial version, still in discussion. Proposed : technical maturation reached, ready for implementation. Active or Final : widely implemented and used (Active for informational processes, Final for protocol changes). Replaced or Withdrawn : replaced by a more recent BIP or withdrawn by its author. Rejected : explicitly set aside by consensus.

A protocol-change BIP (consensus change) further requires a soft-fork×Fork (soft fork, hard fork)Change to the protocol rules. A soft fork stays compatible with old nodes (SegWit, Taproot); a hard fork creates a separate chain (Bitcoin Cash in 2017).See in the lexicon → or a hard-fork. The historical route for soft-forks is BIP 9 (miner×MinerComputer or farm of computers that solves the cryptographic puzzle required to add a new block to the blockchain, in exchange for a bitcoin reward.See in the lexicon → signaling via version bits), BIP 8 (signaling with forced activation at flag day), or Speedy Trial (variant used for Taproot×TaprootMajor Bitcoin upgrade activated in November 2021 (BIP 341). Brings more privacy, scripting flexibility and the efficiency of Schnorr signatures.See in the lexicon →). No route is fixed : each soft-fork negotiates its own activation method. This is the big difference between Bitcoin and Ethereum : no central roadmap, just BIPs that rise or fall based on distributed consensus.

BIP 32/39/44 : the foundation of modern wallets

BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 32 (Pieter Wuille, 2012) defines Hierarchical Deterministic Wallets : from a single cryptographic seed, a wallet×WalletSoftware or device that manages your Bitcoin keys and lets you sign transactions. A wallet does not really « hold » your bitcoins, it holds the keys that prove you own them.See in the lexicon → can deterministically derive an infinity of private/public key×Public keyNumber derived mathematically from the private key, used to build a Bitcoin address. Can be shared freely.See in the lexicon → pairs organised in a tree. The operational consequence is that a single seed backup is enough to restore an entire wallet, no matter how many addresses were used.

BIP 39 (Trevor Perrin, Marek Palatinus, Pavol Rusnak, 2013) adds the mechanism of 12 or 24 mnemonic words to encode that seed in a humanly-noteable form. A list of 2 048 standardised English words, plus a checksum, lets you write the seed on paper or stamp it on a steel plate. The optional BIP 39 passphrase×PassphraseExtra word or phrase you add to your seed phrase to create a hidden wallet. Optional security layer, independent of the seed.See in the lexicon → adds a 13th (or 25th) custom word working as an additional password.

BIP 44 (Marek Palatinus, Pavol Rusnak, 2014) proposes a convention of derivation paths organised in five levels : m/44'/0'/0'/0/0 for Bitcoin, m/44'/60'/0'/0/0 for Ethereum, etc. It is this convention that lets a single BIP 39 seed serve several cryptos without conflict. BIPs 49 (P2SH-SegWit×SegWit (Segregated Witness)Upgrade activated in 2017 that separates signature data from the rest of the transaction. Lowered fees and paved the way for Lightning Network.See in the lexicon →), 84 (Native SegWit bc1q), 86 (Taproot×TaprootMajor Bitcoin upgrade activated in November 2021 (BIP 341). Brings more privacy, scripting flexibility and the efficiency of Schnorr signatures.See in the lexicon → bc1p) are variants specific to each address type. Together, these four BIPs are the technical foundation of nearly every modern Bitcoin wallet.

Invisible UX BIPs : 21, 174, 327

BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 21 (Nils Schneider, 2012) defines the standard Bitcoin URI : bitcoin:bc1q.../?amount=0.001&label=Coffee&message=... This URI is what every wallet×WalletSoftware or device that manages your Bitcoin keys and lets you sign transactions. A wallet does not really « hold » your bitcoins, it holds the keys that prove you own them.See in the lexicon → scans in a QR code×QR codeTwo-dimensional barcode, ubiquitous in Bitcoin: addresses, Lightning invoices, payment URIs. Always check the decoded amount and address before confirming.See in the lexicon →. Without BIP 21, each wallet would have its own convention and cross-payments would not work. BIP 21's success is such that you no longer see it : it is everywhere, like HTTP for the web.

BIP 174 (Andrew Chow, 2017) introduces Partially Signed Bitcoin Transactions (PSBT×PSBT (Partially Signed Bitcoin Transaction)Standard format (BIP 174) that lets you build a transaction on one device, sign it on another and broadcast it from a third. Backbone of the modern multisig workflow.See in the lexicon →) : a standardised format to describe a partially signed Bitcoin transaction, transferable between wallets and hardware wallets without risk. This is what makes a 2-of-3 multisig×Multisig (multi-signature)Configuration where a transaction must be signed by several independent keys to be valid (for example 2 of 3). Reduces the risk that a single key theft causes loss of funds.See in the lexicon → possible where Alice signs on her hardware, exports the PSBT to a USB key, hands it to Bob who signs in turn and broadcasts. Sparrow, Specter, Bitcoin Core×Bitcoin CoreReference implementation of the Bitcoin software, written in C++ and maintained by an open-source community. This is the software that most nodes run.See in the lexicon →, Trezor×Ledger, Trezor, Coldcard, BitBoxMain hardware wallet brands. Ledger Nano S Plus / X (French, the best-seller), Trezor Model T (Czech, open source), Coldcard Mk4 (Canadian, ultra-secure, Bitcoin-only), BitBox02 (Swiss, open source).See in the lexicon →, Ledger×Ledger, Trezor, Coldcard, BitBoxMain hardware wallet brands. Ledger Nano S Plus / X (French, the best-seller), Trezor Model T (Czech, open source), Coldcard Mk4 (Canadian, ultra-secure, Bitcoin-only), BitBox02 (Swiss, open source).See in the lexicon →, Coldcard×Ledger, Trezor, Coldcard, BitBoxMain hardware wallet brands. Ledger Nano S Plus / X (French, the best-seller), Trezor Model T (Czech, open source), Coldcard Mk4 (Canadian, ultra-secure, Bitcoin-only), BitBox02 (Swiss, open source).See in the lexicon → all support PSBT. Without BIP 174, modern multisig would not exist in its current form.

BIP 327 (Jonas Nick, Tim Ruffing, Yannick Seurin, 2023) standardises MuSig2×MuSig2Schnorr signature aggregation protocol (BIP 327). Lets multiple signers produce a single signature indistinguishable from a single-signer one.See in the lexicon →, the Schnorr×SchnorrMore modern signature algorithm, activated by Taproot in 2021 (BIP 340). More efficient, enables signature aggregation (MuSig2).See in the lexicon → signature aggregation discussed in the Taproot×TaprootMajor Bitcoin upgrade activated in November 2021 (BIP 341). Brings more privacy, scripting flexibility and the efficiency of Schnorr signatures.See in the lexicon → article. Promoted to Final in 2024, BIP 327 is now implemented in libsecp256k1×libsecp256k1Reference cryptographic library for Bitcoin, written in C and maintained by the Bitcoin Core developers. Used by almost every serious wallet.See in the lexicon → and used by Casa, Unchained, Liana, Sparrow and Specter for modern confidential multisigs. It is the textbook example of a BIP making a protocol change (Taproot) actually usable on the application side.

BIP 118 ANYPREVOUT : for next-generation Lightning

BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 118 (Christian Decker, Anthony Towns, 2017, draft to Proposed in 2022) proposes a new signature flag SIGHASH_ANYPREVOUT (and its corollary SIGHASH_ANYPREVOUTANYSCRIPT). The idea : let a signature not be bound to a specific output, but to any output meeting a given condition. It is a subtle but fundamental change for the class of contracts where the same signature must apply to multiple versions of a transaction.

The flagship application is Eltoo, a Lightning Network×Lightning NetworkSecond-layer payment network on top of Bitcoin. Enables near-instant and near-free payments through channels opened between users.See in the lexicon → rewrite proposed by Decker, Russell and Osuntokun in 2018. Today, a Lightning channel×Lightning channel2-of-2 multisig between two participants that lets them exchange sats off-chain as many times as they like, until they close the channel and publish the final balance on Bitcoin.See in the lexicon → uses penalty transactions to discourage cheating (publishing an old state). Eltoo simplifies it radically : with ANYPREVOUT, you replace the penalty with a simple override where the latest state always wins. No more penalty, no more risk of loss if you miss the reaction window, no more need for watchtowers in most cases.

BIP 118 is in active discussion in 2026 but has not yet received a clear activation path. Lightning developers (notably Decker and the ACINQ team) have been pushing it for years. Resistance mostly comes from other BIPs (CTV, OP_VAULT×VaultCustody setup for long-term storage, often multisig, kept offline and touched rarely.See in the lexicon →) being in the queue too, and the need to choose which soft-fork×Fork (soft fork, hard fork)Change to the protocol rules. A soft fork stays compatible with old nodes (SegWit, Taproot); a hard fork creates a separate chain (Bitcoin Cash in 2017).See in the lexicon → goes first. Likely activation 2027-2028 if consensus forms.

BIP 119 CTV and BIP 345 OP_VAULT : the covenants

A covenant×Covenant (CTV, OP_CHECKTEMPLATEVERIFY)Programmable restriction on how bitcoins may be spent in the future. Proposals like CTV (BIP 119) would open the way to vaults and improved channels; the community debate is ongoing.See in the lexicon → in Bitcoin is a constraint attached to an output that restricts how this output can be spent in the future. Today, Bitcoin does not support covenants : once a signature authorises a spend, the recipient can send the funds anywhere without restriction. Covenants would open a new class of contracts : vaults with mandatory withdrawal delay, Ark-style payment pools, etc.

BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 119 (Jeremy Rubin, 2020) proposes OP_CHECKTEMPLATEVERIFY (CTV) as the minimal covenant : an output can require that the transaction spending it have an exact pre-specified shape (same outputs, same amounts, same locktimes). CTV is the simplest and least technically controversial covenant, but the debate on its merits versus risks has been intense since 2021. Jeremy Rubin left the project in 2023, BIP 119 remains alive carried by other contributors.

BIP 345 (James O'Beirne, Greg Sanders, 2023) proposes OP_VAULT×VaultCustody setup for long-term storage, often multisig, kept offline and touched rarely.See in the lexicon → as a more structured covenant dedicated to time-locked vaults : a spend must go through a configurable waiting delay, during which the owner can cancel via a recovery key. It is the dream tool for institutional custody×CustodyThe custody of funds. See self-custody and custodial in the dedicated section below.See in the lexicon → and for individuals who want strong protection against key theft. BIP 345 is still in Draft at end of 2026, in discussion on Delving Bitcoin. The consensus on the covenant sequence (CTV before OP_VAULT, or both together, or neither) remains to form.

BIP 300 Drivechains and critical BIP reading

BIP×BIP (Bitcoin Improvement Proposal)Standard document that describes a proposed improvement to the Bitcoin protocol. Numbered (BIP 32, BIP 39, BIP 174, and so on). Open, public process on GitHub.See in the lexicon → 300 (Paul Sztorc, 2017) proposes Drivechains×Drivechains (BIP 300/301)Proposal by Paul Sztorc: sidechains without a federation, secured by the Bitcoin miners themselves. Highly debated in the community.See in the lexicon → : a mechanism that lets Bitcoin serve as a settlement layer for specialised sidechains, where anchoring and withdrawal from the sidechain×SidechainIndependent parallel chain linked to Bitcoin through a peg-in / peg-out mechanism. Liquid Network is the main Bitcoin sidechain.See in the lexicon → are validated directly by Bitcoin miners (via miner×MinerComputer or farm of computers that solves the cryptographic puzzle required to add a new block to the blockchain, in exchange for a bitcoin reward.See in the lexicon →-activated peg-out×Peg-in, peg-outTransfer of BTC to a sidechain (peg-in, e.g. BTC to L-BTC on Liquid) and the reverse operation (peg-out). On Liquid, the operation is signed by the federation.See in the lexicon →). It is technically the most ambitious BIP in discussion, and the most controversial : its detractors (notably Adam Back and the Blockstream community) consider that it introduces a miner centralisation risk and alters Bitcoin's economic incentives.

BIP 300 has oscillated between Draft and Withdrawn for years. In 2025-2026, several modification proposals (BIP 301 for the merge-mined block, BIP-Drivechain-Lite variants) try to relaunch the debate. Activation remains unlikely in the short term, but BIP 300 crystallises a broader discussion on the role of sidechains in the ecosystem (to be matched with Liquid Network, covered in another topic article).