What is Flippening?

Could there be another type of cryptocurrency that can beat bitcoin? That's the concept offered by flippening, let's look at it in full in this article!

Get to know Flippening

The crypto world is abuzz with the term Flippening, a prospect eagerly awaited by Ethereum fans. Flippening describes a scenario where Ether's total market capitalization surpasses that of Bitcoin. The term first appeared during the 2017 bull run and grew in popularity as Ethereum reached its all-time high against Bitcoin.

At that time, Ethereum's flexibility, which allowed building applications via smart contracts, triggered a surge in liquidity and prices. However, its market capitalization then fell again compared to Bitcoin. Until now, Bitcoin still maintains its position as the most expensive cryptocurrency based on market capitalization, followed by Ethereum in second place.

When Does Flippening Occur?

Flippening is often understood as Ethereum surpassing Bitcoin's market capitalization. Though, there are various metrics that can be used to compare the two blockchains. In certain metrics, Ethereum has already surpassed Bitcoin, such as the number of transactions and total transaction fees generated.

Even though its transaction volume was higher than Bitcoin during the 2021 bull run, Ethereum did not maintain this advantage. Other metrics such as trading volume, Google search interest, active addresses, and market capitalization still favor Bitcoin at the moment.

Will Flippening Really Happen?

The possibility of Flippening is a hotly debated topic in the crypto community. Many Ethereum supporters anticipate a potential shift after The Merge. The total supply of these two cryptocurrencies plays an important role in assessing the possibility.

Bitcoin has a fixed supply of 21 million coins, while Ethereum has no supply limit. The Merge has significantly reduced new ETH issuance, potentially even making it deflationary. For Ethereum to outperform Bitcoin, it needs to reach an ETH/BTC ratio of at least 0.17.

Another important aspect is the use case of each cryptocurrency. Bitcoin, often referred to as “digital gold” or a digital commodity, is known for its reliability as a store of value. Ethereum, nicknamed “digital oil”, facilitates transactions in the DeFi and NFT space through smart contracts. Ethereum's transition to proof-of-stake and the introduction of a burn mechanism could potentially make it deflationary.

Ultimately, the market will determine the demand for “digital oil” or “digital gold” based on these use cases.

How Does Flippening Happen?

Flippening does not mean one ETH will exceed the value of one BTC. Flippening refers to the combined total market capitalization of all coins. It should be noted, Ethereum could surpass Bitcoin even in a period of falling prices if Bitcoin experiences a more significant decline.

Experts predict the correlation between the two assets needs to decrease for Ethereum to outperform Bitcoin. Opinions regarding this possibility vary widely, with some estimating a 5% chance and others estimating a timeline of up to 2035.

A comparison between Bitcoin and Yahoo's past dominance suggests that Ethereum's utility in smart contracts may eventually challenge Bitcoin's supremacy.

As one industry expert put it, "It's almost inevitable the Flippening will happen - the question is, will Ethereum remain number one afterward?"

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DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.