The BTC Network is a decentralized public record. Therefore, it needs consensus from all of its users to function.

So if changes are needed to improve the network and its operations, how does the BTC Network decide which among the proposed developments are to be implemented? How do they choose which ones to reject?

They do it through the BIP or the BTC Improvement Proposal. With BIP, anyone in the Bitcoin developer community can submit a change or upgrade to the Bitcoin Network, and miners then vote on it.

A miner’s equipment uses energy to operate and perform various hashing calculations known as hash or hashing power. In return, a miner’s hashing power determines their voting ability.
If a miner has higher hash power, his vote carries more weight than other miners with lower hash powers.

How Do BTC Improvement Proposals Work?

BIPs are “proposed” improvements to the code that are submitted directly to the BTC codebase. BIPs adhere to rules regarding what is and isn’t allowed. BIPs do not include bug patches, code rewriting, or minor performance improvements, for instance.

The Three kinds of BIP

1. Standards Track BIPs

This type of BIP covers all changes to the network convention, block, exchange approval procedure, or anything else affecting interoperability (the system’s ability to exchange and use data). For Standard Track BIPs, there must be a community consensus.

2. Informational BIPs

Basic rules, configuration problems, and supporting information. New operational frameworks are not proposed in instructive BIPs, nor do they reflect the community consensus. These BIPs are merely informational and might or might not be embraced by the BTC community.

3. Process BIPs

Displays or suggests a process modification. These BIPs have uses outside of the BTC convention as it has been run up until this point, and they resemble Standards Track BIPs in many ways. Process BIPs require community consensus and receive careful consideration from the community.

What are BTC Improvement Proposals: Upgrades Introduced by BIPs

Some available upgrades like HD Wallets, SegWit, and more came from BIPs.

SegWit

The Lightning Network, which integrates many of the BTC Network’s scalability goals, was paved with SegWit. As a result, lightning Network aims to increase the number of exchanges handled by BTC from seven per second to one million per second.

Hierarchical Deterministic (HD) Wallet

Multiple public and private keys are generated by an HD wallet using a seed. These keys transfer and receive Bitcoin and increase security and productivity.

The Voting Power Debate

The hash rate of a miner determines how much voting power they have. This inevitably means that miners with high mining power, for example, 20%, can enact proposals that serve their interests more than the community. A BIP is passed when 55% of miners agree on it.

There are concerns that as mining pools and activities grow, individuals who own the most equipment may impact the organization and undermine the purpose of decentralization.
In any event, the BIP architecture is still young and has brought about changes that have positively affected the network.

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