BIP141, or Bitcoin Improvement Proposal 141, is a proposal that introduced the Segregated Witness (SegWit) upgrade to Bitcoin. This upgrade aimed to address two main issues: transaction malleability and block size limitations. Transaction malleability is a flaw that allows the modification of a transaction’s identifier before it gets confirmed on the blockchain.

This can create problems for wallets and applications that rely on transaction IDs. SegWit solves this by separating the transaction signatures (witness data) from the transaction data itself, preventing alteration of the transaction ID. Additionally, SegWit changes how block size is calculated.

By moving witness data outside the original block size limit, SegWit effectively increases the block’s capacity, allowing more transactions to be included in each block. This helps to reduce network congestion and lower transaction fees. Overall, BIP141 enhances Bitcoin’s scalability and usability, paving the way for further innovations and improvements in the network. It was activated in August 2017 and has since enabled more efficient transaction processing.