Understanding the Flippening: What it is and Why it Matters

Active Addresses are the number of unique addresses that send or receive a transaction in a given week. A smart contract is a set of instructions written in computer code that runs automatically all parts of an agreement and may be used to automate the agreement between parties. This completely removes the need for an intermediary since the outcome is pre-determined. 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. This form of ledger technology is what’s behind cryptocurrencies and other tech trends. An eclipse attack is a type of P2P network threat that disrupts the operations of the network by isolating and manipulating one node.

  1. It also briefly outperformed Bitcoin in transaction volume during the 2021 bull market.
  2. The flippening is a term used to describe a potential “flip” in the largest cryptocurrency.
  3. Two years ago, bitcoin accounted for almost 67% of the total crypto market.
  4. In the case of cryptocurrencies, the market cap is determined by multiplying the price of a single coin by the total number of coins in circulation.

In addition, the inflow of liquidity around 2017 led to a significant increase in Ether’s price, giving Ethereum supporters the hope of experiencing the Flippening. “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.” A future where smart contracts define many of the interactions between individuals. 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.

In the case of cryptocurrencies, the market cap can also be a good indicator of adoption and demand. Generally, the higher the market cap, the more people are interested in a particular cryptocurrency and the more valuable it is perceived to be. Ethereum would only need to capture a fraction of the traditional finance or global art market to dwarf bitcoin’s total https://www.forexbox.info/forex-scalping-strategy-forex-scalping-strategy/ market capitalization over time, he said. As at the time of writing this article, Bitcoin has a total market capitalization of $625B and accounts for over 47% of the total crypto market cap. 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.

What is The Flippening?

Goldman Sachs also released a recent report naming Ethereum as the crypto with the highest real-world use potential. It cited a few reasons why the digital asset beats out Bitcoin in this regard. Bitcoin was created to bypass the intermediaries and middlemen upon which the world’s financial system had to come rely.


Block Jewel

Active Addresses

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. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. It’s a fun metric to explore, said Lex Sokolin, the global fintech co-head and head economist at ConsenSys, in an email. But they actually both perform very different functions, bitcoin as a store of value and ethereum as a technology platform, he added.

This completely removes the need for a third-party to guarantee trust. This website tracks and compares the two cryptocurrencies across 9 indicators. Tokens based on a blockchain, NFTs are used to guarantee ownership of an asset.

Total Transaction Fees

Despite a more than six-year head start for Bitcoin, Ethereum quickly skyrocketed into the No. 2 position in terms of largest cryptos on the market. 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 -0.01%), at just understanding pivot points over $70 billion). 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, 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.

In the long-term though, most crypto investors don’t see significant market implications from the flippening. 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. “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.

“Ethereum has generally gained pace on bitcoin during bullish runs,” said Kelvin Ting, head of blockchain strategy at crypto exchange EQONEX, in an email. “If it’s to overtake bitcoin in market cap terms, it is more likely to occur when both are increasing in value.” 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.

How Will the Flippening Happen?

Or, Ethereum’s price simply outperforming Bitcoin over time (even if the price of both were to decline) could also cause a flippening. 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. Flippening is an essential concept in cryptocurrency because it represents a potential shift in the market landscape. While it’s difficult to predict precisely when or if the Flippening will occur, it’s clear that both ETH and BTC have strong support and could potentially continue to jockey for the top spot.

Bitcoin’s blockchain is a distributed ledger of transactions bundled into blocks that are chained together chronologically. Solidity is a high-level, object-oriented programming language created for designing and implementing smart contracts. The Transaction Count shows the relation of total on-chain transactions on the network (100% means https://www.day-trading.info/what-exactly-are-bonds-and-how-do-they-work/ Ethereum has flipped Bitcoin in that metric). For example, if there are 10 million BTC in circulation, and the price of each BTC is $10,000, the market cap of BTC would be $100 billion. The Flippening is the hypothetical moment when Ethereum’s market cap surpasses that of Bitcoin, how it could potentially happen, and why it matters.

As of the end of June 2021, Uniswap has a total value locked of about $5b. All activities including spending must be voted on and approved by the community. This allows for strangers to efficiently, openly and transparently collaborate in a manner that is truly unprecedented. For an attack to succeed, a majority of the copies of the blockchain would need to be amended simultaneously.