It has been a demoralising month and week for Bitcoin (CRYPTO: BTC) investors. After topping out at an all-time high of $83,598.87 mid last month, the speculative digital asset has been struggling to find its feet.
Previously a catalyst for upwards momentum following the announcement of buying and accepting Bitcoin, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk is now being blamed for the accelerated selloff in the cryptocurrency over the last week.
Elon Musk tweeted that Tesla will no longer accept Bitcoin amidst his own concerns of exorbitant energy usage per transaction. Now investors are wondering whether the electric vehicle company has dispensed the original crypto completely from its balance sheets.
Despite these recent developments, the Bitcoin community continues to work towards improving the technology behind the now 12-year-old currency.
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Could Taproot lead to a better Bitcoin?
Musk has seemingly taken a negative stance towards Bitcoin, pointing towards the Cambridge Bitcoin Electricity Consumption Index, which currently estimates Bitcoin's electricity consumption to be 147.41 TWh at an annualised rate. For comparison, Australia's total electricity consumption was 192.4 TWh in the 2019-2020 financial year.
The latest update in the Bitcoin code is aimed at addressing some key matters. The latest proposed upgrade is known as Taproot. In the most significant update since 2017, Taproot is expected to:
- Increase privacy for transaction type
- Add more flexibility with a new type of signature
- Decrease fees
- Make the Lightning Network (a second layer solution) cheaper, more flexible, and more private
These changes to Bitcoin will only come into effect if 90% or more of the processed blocks across two weeks receive a signal of support for Taproot from miners.
Despite the improvements not specifically addressing energy usage, it demonstrates a continued effort from developers to enhance the technology.
When could we see changes?
The signalling process is taking place as you read this. At the time of writing, only 496 blocks of the 2016 blocks have been completed – 15.33% have approved the Taproot activation, while 9% have blocked the activation.
If the activation is blocked, an additional two-week long signalling windows will occur until 11 August 2021. If Taproot is not approved by then, the update will go back into development.
