Flippening, as a term, first appeared in 2017. This term refers to the possible event when Ethereum will become the world’s largest cryptocurrency, outperforming Bitcoin as such.
Bitcoin was the first cryptocurrency ever, and since then, it has had the highest market cap. However, it suffered a fall in early 2018 and fell by a few market points. Many investors became concerned that the flippening would occur. One of the key reasons for the expected change is because Ethereum is considered more flexible and has various additional advantages. One of the advantages being the ability to build smart contracts.
Before we get started, let’s look at Bitcoin and Ethereum and how they work.
Bitcoin VS. Ethereum
By any metric, Bitcoin has long been the market leader, conversation starter, and dominant force in the financial markets, ever since blockchain and crypto became part of the discussion.
With a market capitalization of more than $1 trillion, large purchases by household brands such as Tesla, and crypto payments becoming supported by many major processors, it is reasonable to conclude that Bitcoin dominance is all but guaranteed.
However, on the other hand, the Ethereum blockchain has quickly increased in terms of crypto valuation and the other apps created on this platform. Taking a step back and ignoring the price tracking that captivates market experts and users daily, Ethereum has been the dominant story in the second half of 2020 and 2021. Aside from the recent Ether price increase, several blockchain apps that have captured public attention and interest have been built and operate on the Ethereum network.
While Bitcoin has continued to dominate the global crypto debate, there is a case to be made that Ethereum will lead the next stage of blockchain implementation. In other words, it appears that open competition will be held for the first time in the history of financial markets to choose which protocols and cryptocurrencies will lead the sector forward. Below we will explain some of the major aspects that the market will have to consider moving forward.
Applications VS. Transactions
The most heated topic in the last couple of years has been whether cryptocurrencies can be used for transactions rather than merely as a speculative investment.
Yet, this is apart from the fact that many cryptos, especially stablecoins intended to be used as a means of exchange, do not accurately reflect their capabilities or use cases. Cryptocurrency’s usage as a transactional medium is still discouraged by the need for reporting and prospective tax responsibilities. In other words, every crypto transaction may be subject to taxation. This taxation is bad news for Bitcoin maximalists who predict that fiat currencies will be wiped out soon.
On the other hand, the Ethereum blockchain has shown to be a good platform for new use cases like decentralized finance (DeFi) and Non-Fungible Tokens (NFTs).
Asset VS. Platform
Another important element to consider when comparing Ethereum and Bitcoin is their market value. Every currency that trades on the crypto market suffers price volatility on a regular basis. This volatility extends to the crypto ecosystem as a whole. Given the volatility of assets, one cryptocurrency can surpass another in terms of market capitalization and value.
The Flippening
A considerable amount of flippening took place in January 2018, when Bitcoin’s market dominance fell under 34%. In July 2017, however, Ethereum reached a market dominance of 31%, while Bitcoin had a market dominance of 38%. This is the closest we have been to the so-called flippening. Currently, Bitcoin’s market dominance is 47%, while Ethereum’s is around 18%.
This is proof that the Ethereum blockchain has been rapidly rising in value and the various apps built on them. Ethereum piqued the curiosity of a large number of investors in both 2020 and 2021. The current price rise of ETH has sparked many people’s interest, resulting in a shift to the Ethereum blockchain.
Ethereum is expected to be the next stage of blockchain implementation, having smart contracts at the center of its network.
Takeaways
- The flippening first appeared as a term in 2017.
- Even though Bitcoin is considered the first and most successful cryptocurrency, it fell by a few market points in 2018.
- Ethereum has been a dominant coin and the second after Bitcoin, which continuously rose in 2020/2021.
- The market will have to consider two major aspects moving forward: Application VS. Transactions and Asset VS. Platform.
- In November of 2017-2018, a significant amount of flippening happened. During that time, Ethereum nearly flipped Bitcoin in terms of market cap.
