In turn, Ethereum was roughly triple the size of the third-largest crypto by market cap (as of this writing, Tether (USDT 0.02%), 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. Bitcoin officially launched in January 2009, and it has been the largest cryptocurrency ever since.

Currently, the rally of the ether prices have caught the attention of many and has resulted in many to shift to the Ethereum blockchain. The assumption that Ethereum gives better freedom and the added benefit of being able to write smart contracts was a crucial aspect that prompted predictions that a flippening might occur. To some extent, internal flippening already happened in 2019 when the number of ERC-20 transactions surpassed the number of transactions completed using Ethereum itself. Bitcoin is used more as a base currency for crypto traders, so Ethereum’s share of that is much less than its share of market cap.

Now is a good time to explain the flippening and how it can affect bitcoin’s position as the top cryptocurrency in the next few years. However, he also noted that this analysis ignores the rise of ethereum challengers and bitcoin as a monetary innovation, which typically has sticky network effects. New bitcoin scaling solutions could also help it to grab some of ethereum’s market share.

“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. Bitcoin’s market value moved from $600 billion to just under $1.2 trillion with price surging 100% from the start of the year. Ether’s market capitalization has tripled from $150 billion to over $450 billion with the price increasing 439%. The term “Flippening” refers to the hypothetical moment of Ethereum (ETH) overtaking Bitcoin (BTC) as the biggest cryptocurrency.

However, bear in mind that a flippening scenario doesn’t necessarily mean Ethereum price would go up. This flip in market cap could still play out even if Ethereum falls in value but Bitcoin’s value falls by an even greater percentage. Basically, it’s wise to exercise caution here since a potential flippening doesn’t make Ethereum a good investment.

  1. To some extent, internal flippening already happened in 2019 when the number of ERC-20 transactions surpassed the number of transactions completed using Ethereum itself.
  2. Both Bloomberg commodities analyst Mike McGlone and van de Poppe expected the upgrade to boost the price and the market cap.
  3. Uniswap is a decentralized finance protocol that is used to exchange cryptocurrencies and tokens.
  4. Another metric is the total transaction fees generated by the blockchains, where Ethereum has flipped Bitcoin by many multiples.

In such a future, the ability to implement and participate in such contracts facilitated by owning ether is an added utility in addition to its use as a form of digital payment. Instead, a more competitive cryptocurrency ecosystem will be created, and altcoins are expected to significantly rise in value over the next few months and years. Ethereum, Monero, Dash, Factom, and others are all trying to find their place in the world right now. Nearly all of these currencies have risen in value despite bitcoin’s price either stagnating or going down. While it is possible this is just a temporary change, the flippening is not a trend that should be ignored by any means. “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.

Consumers, investors, traders, and speculators have shown an appreciation for bitcoin these past few years, despite the cryptocurrency being far from perfect. Any other currency, or altcoin if you prefer that term, seemingly derives its value from being paired to bitcoin’s price. Over the years, this caused the value of altcoins to go down if bitcoin’s price took a hit. 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 van de Poppe expected the upgrade to boost the price and the market cap. In the crypto circles, flippening is colloquially used to mean one cryptocurrency overtaking the other in, among other things, market capitalization.

But they actually both perform very different functions, bitcoin as a store of value and ethereum as a technology platform, he added. “I didn’t think it was going to happen [in May 2021] and I still don’t think it’s going to happen now,” Alfred said. “There’s no way that ethereum’s price is going to appreciate enough to catch bitcoin.” “There were a bunch of ethereum VC type people and crypto DeFi type investors who were all calling for the flippening,” he said. “You can go back and look at right when ethereum was hitting $4,000, because there was a fever pitch for it.” In other words, Bitcoin being the first cryptocurrency and its decentralization will cause BTC to still have an important place in the sector.

Ether supplanting bitcoin matter of when not if

This completely removes the need for a third-party to guarantee trust. This website tracks and compares the two cryptocurrencies across 9 indicators. “I view the two as distinct, and whether they ‘battle’ for the top spot on CoinMarketCap is more noise than signal,” Thorn said. b2margin “The term ‘flippening’ began appearing in social media such as Twitter and Reddit in February 2017,” said EQONEX’s Ting. “However, we are unable to pinpoint where the term was first used.” These conditions make the flippening more likely, according to crypto experts.

How the flippening works

Ethereum’s flexible structure and smart contract functionality raised hopes that Ethereum would overtake Bitcoin on the market, but the flipping failed to materialize. For example, Ethereum has a much larger transaction count than Bitcoin at the time of writing (October 2022). Another metric is the total transaction fees generated by the blockchains, where Ethereum has flipped Bitcoin by many multiples. In transactions volume, it briefly flipped Bitcoin during the 2021 bull run but has since retreated again. 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. The flippening is a term used to describe a potential “flip” in the largest cryptocurrency.

Risks of Real Estate Flipping

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. Ethereum has flipped Bitcoin if metrics like transaction count are considered. It also briefly outperformed Bitcoin in transaction volume during the 2021 bull market. Generally, Bitcoin still dominates the market in terms of trading volume, Google search keywords, market capitalization, and active addresses.

Market cap is a measure of how a specific crypto is performing by multiplying its current market price with its circulating supply. Because of blockchain technology, the name and identity of the founder still remains a mystery. Essentially, Bitcoin is a type of cryptocurrency that is balanced on a public ledger. The transaction fees charged are very low and it is operated by a decentralized authority unlike other currencies that are issued by the government. It is one of the first few digital currencies to use peer-to-peer technology.

Bitcoin is without a doubt, one of the most innovative and transformative technologies ever created. This explains why it’s even now the most valuable and popular cryptocurrency. The DeFi movement https://traderoom.info/ has the potential to transform the world as it offers alternative financial solutions on a global scale, and allows users to do more with their tokens than simply as a store of value.

As with other investment options in the burgeoning crypto economy, potential investors should weigh the risks of buying cryptos such as Bitcoin and Ethereum. Crypto prices are volatile and will likely continue to be since the technology is still developing and rapidly changing. If you decide to invest at all, most investors should make crypto holdings part of a larger diversified portfolio strategy. Given this dynamic, a faster-growing price of ether (the native currency on the Ethereum blockchain network) in relation to Bitcoin would help make the flippening occur.