The #Flippening: Will Ether ‘Pass’ Bitcoin And What Would It Mean?
Some market observers emphasized the key role played by token sales (or ICOs) when explaining why ether’s market cap might surpass that of bitcoin’s. Ethereum is largely inspired by Bitcoin, and is currently the second most valuable cryptocurrency with a market capitalization over $216B. Although it is commonly referred to as Ethereum overtaking Bitcoin in market capitalization, there are several other metrics where the two blockchains can be compared. As with other investment options in the burgeoning crypto economy, potential investors should weigh the risks of buying cryptos such as Bitcoin and Ethereum.
The term “Flippening” has been gaining much attention in cryptocurrency in recent years. It refers to the hypothetical moment when Ethereum (ETH) overtakes Bitcoin (BTC) as the largest cryptocurrency by market capitalization. While market cap is the primary metric used to determine the Flippening, it’s not the only one. Branded ‘The Flippening’ by market observers, this new hypothetical is defined loosely as the point at which a competing blockchain network could replace bitcoin as the largest and best capitalized top 10 free options trading courses 2021 blockchain.
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Even though market cap is the main metric to determine “The Flippening” (above), there are a number of other metrics that can be observed (below). “Some have argued that if ethereum were to absorb even 1% of the nearly $400 trillion global derivatives market, Ethereum would eclipse bitcoin’s current market capitalization,” Thorn said. Ethereum would only need to capture a fraction of the traditional finance or global art market to dwarf bitcoin’s total market capitalization over time, he said. “Due to its recent upgrade, the number of new No. 2 coins as a percent of current coins is likely to dip below that of bitcoin, with the potential of going negative,” said McGlone in a September research note. “If ethereum’s pace of 2021 price appreciation stays the same versus bitcoin, the market cap of No. 2 will flippen No. 1 toward the end of 2022.” Both tokens have seen their market cap soar this year as interest in cryptocurrencies surged.
- This would mean that ETH becomes the largest cryptocurrency by market capitalization, overtaking BTC.
- “Some have argued that if ethereum were to absorb even 1% of the nearly $400 trillion global derivatives market, Ethereum would eclipse bitcoin’s current market capitalization,” Thorn said.
- Regardless of what happens, the flippening is an important concept in the cryptocurrency world and understanding it is key for long-term success.
- The Flippening is crucial because it would represent a significant shift in the cryptocurrency landscape.
- Aave currently supports over 20 different cryptocurrencies and as of the end of June 2021, has over $16B in total value locked (TVL), a common metric to measure the amount of assets locked in a protocol.
- However, now that ETH does not have ASIC miners but only stakers, its reward is much lower and will likely stay much lower.
As of mid-2022, Bitcoin (about $575 billion) was more than double the size of Ethereum (almost $220 billion). In turn, Ethereum was roughly triple the size of the third-largest crypto by market cap (as of this writing, Tether (USDT 0.03%), at just over $70 billion). Its creator, Satoshi Nakamoto (a pseudonym for a person or group of people), released a white paper describing how the digital currency concept would work in 2008 amid the turmoil of the Great Recession.
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Bitcoin has long been the dominant cryptocurrency, both in terms of market capitalization and public recognition. However, as the crypto space evolves, other cryptocurrencies have emerged with unique features and use cases, challenging Bitcoin’s position. The recent implementation of ethereum’s EIP-1559 upgrade, which ‘burned’ some ether tokens to reduce overall supply, caused crypto analysts and investors to revisit the idea of the flippening. Both Bloomberg commodities analyst Mike McGlone and xglobal markets review by online casino city van de Poppe expected the upgrade to boost the price and the market cap. In recent months the term has also been used in reference to different cryptocurrencies. Recently, Twitter users have been using it to describe shiba inu surpassing dogecoin as the largest joke cryptocurrency by market capitalization.
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As there is no central authority to update the blockchain, it is instead up to the participants of the network to validate transactions through a consensus mechanism that is open to everyone. In traditional finance, banks are a necessary intermediary, and are trusted to maintain a ledger which keeps a list of transactions. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain. A large mining reward means there is more incentive for miners to invest in machines and secure the network. However, now that ETH does not have ASIC miners but only stakers, its reward is much lower and will likely stay much lower.
“Will level ones collectively be larger than bitcoin? Maybe, probably,” said Novogratz during a keynote at the Token2049 conference in London. “But what we don’t know yet is ethereum versus solana, ethereum versus luna, ethereum versus polkadot, how the level one battle is going to turn out.” “If we’re still in a bull cycle, I think ether will flip bitcoin in the next nine months,” said Michaël van de Poppe, a crypto trader who runs the consultancy Eight Global, as part of a recent interview with Insider. The total USD value of fees paid to make a transaction on the network (100% means Ethereum has flipped Bitcoin in that metric). There can never be more than 21M bitcoins of which over 19M have already been minted.
Ether supplanting bitcoin matter of when not if
We notice the exclusion of middlemen and intermediaries is a running theme when it comes to the blockchain. This was right after the 2008 global financial crisis that came about as a result of excessive risk-taking by the banking institutions entrusted with safeguarding funds. The result of this was fortunes lost and lives ruined with very little repercussion for the perpetrators.
The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. Several metrics measure the usefulness, value, or importance of a cryptocurrency. But when most people talk about the “flippening” taking place, they are usually referring to Ethereum overtaking Bitcoin in market capitalization specifically. “The Flippening” refers to the possible future event when Ethereum overtakes Bitcoin to become the most valuable cryptocurrency in terms of market capitalization.
Charles Hayter, co-founder and CEO of cryptocurrency exchange service CryptoCompare, was also optimistic that ethereum could become the dominant blockchain. Currently, blocks in bitcoin’s blockchain can only include the wisdom of finance up to 1 MB of transaction date, meaning that they can only process a fixed number of exchanges. “The flippening, while it’s an interesting conversation point to me, doesn’t really matter, because I wouldn’t invest in ethereum simply because it might go up more than bitcoin in the short term,” Alfred said.
These value fluctuations accurately indicate a degree of volatility within the crypto market, however, larger coins that have a market cap value greater than 10 Billion are considered to be more stable. The Flippening refers to a theoretical event in which Bitcoin loses its dominance over the cryptocurrency market. This event, while thoroughly hypothetical is nonetheless possible, and represents the massive potential for opportunity and disruption in the growing cryptocurrency ecosystem. If Ethereum usage continues to rise, and supply begins to contract, these two forces combined could lead to a flippening.
