What is the flippening in crypto?
The flippening refers to a potential future event where Ethereum's market capitalization surpasses that of Bitcoin.
The term was coined in 2017, based on Ethereum's flexibility and its ability to support decentralized applications and smart contracts.
While Ethereum has surpassed Bitcoin in some metrics, such as transaction count, the flippening in terms of market capitalization has not yet occurred.
Understanding the Flippening
The term "flippening" was first used in 2017 to describe a potential future event where Ethereum's market capitalization could surpass that of Bitcoin. This speculation was based on Ethereum's flexibility, particularly its ability to support the creation of decentralized applications (dApps) and smart contracts.
The flippening does not necessarily mean that the value of Ether (ETH), Ethereum’s native currency, has to surpass Bitcoin’s value. Instead, its overall market capitalization has to outperform Bitcoin’s. This could occur if Ethereum’s value increases faster than Bitcoin, or if Bitcoin’s value falls by a bigger percentage than Ethereum’s.
Factors Contributing to the Flippening
Several factors could contribute to the flippening.
One of these is the utility of the cryptocurrency. Ethereum is sometimes referred to as “digital oil” because it facilitates smart contracts, the creation of dApps and Decentralized Autonomous Organizations (DAOs), and supports creators through non-fungible tokens (NFTs). The utilization of Decentralized Finance (DeFi) applications could lead to more people utilizing Ethereum, thereby increasing its utility.
Another factor that could contribute to the flippening is the supply of Ether. Reducing the supply of Ether over time could potentially influence a flippening, as the scarcity would increase its utility.
Current State of the Flippening
As of now, Ethereum has surpassed Bitcoin in some metrics. For instance, Ethereum has a much larger transaction count than Bitcoin. It also consistently outperformed Bitcoin in transaction volume throughout 2021. Yet, Bitcoin still dominates the market in terms of trading volume, Google search keywords, market capitalization, and active addresses.
The Possibility of the Flippening
While the flippening is a popular topic for discussion, it is important to note that it is not guaranteed. There are a number of factors that could prevent it from happening, such as a surge in the price of Bitcoin, or Ethereum’s lack of a hard capped coin supply.
Yet, with the recent developments in Ethereum, such as the Merge, some in the Ethereum community anticipate a potential flippening in the future. To understand whether flippening is possible, it is necessary to look at the total supply of both cryptocurrencies. Ethereum's issuance of new ETH has declined, which some believe could influence a potential flippening.
