Bluegrass-style banjo originated with the innovations of Earl Scruggs, who burst upon the national scene in the mid-1940s. The bluegrass style is characterized by a flurry of fast, brilliant-sounding notes and is the sound behind all-time banjo classics such as Scruggs’ “Foggy Mountain Breakdown” and “Dueling Banjos.”
Before Earl, 19th-century musicians played the banjo by using fingerpicking techniques borrowed from the guitar. Later, early 20th-century rural musicians, such as Uncle Dave Macon and Charlie Poole, featured simplified (at least compared to Earl's!) two- and three-finger picking techniques on their early country recordings.
Although this way of playing the banjo is at the foundation of the bluegrass style, banjo players such as Béla Fleck, Alison Brown, Jens Kruger, and Noam Pilkelny have used this approach as a starting point for incredible musical journeys into classical, jazz, and rock styles.
Bluegrass banjo playing uses the thumb, index finger, and middle fingers of the right hand and (for this reason) is sometimes called three-finger picking. Because banjo players always go for the shortest description, the term three-finger picking has stuck over the years even though it would be more accurate to call it a “thumb and two-finger” style.
Just like when you're figuring out how to play clawhammer banjo, the biggest challenge with the bluegrass style is getting a comfortable right-hand position that enables you to play clearly and quickly. And because bluegrass banjo players use picks on their thumbs and index and middle fingers, part of being able to play bluegrass comfortably is finding the right picks.