What is The Flippening? The Motley Fool

what is the flippening

Flippening is a term used in the cryptocurrency world to describe a hypothetical event where the market capitalization of one cryptocurrency surpasses that of another. It is often used to refer to the possibility of Ethereum overtaking Bitcoin as the largest cryptocurrency by market cap. The term “flippening” is derived from the idea that the positions of the two cryptocurrencies would “flip” in terms of market dominance. While the flippening has not yet occurred, it remains a topic of interest and speculation within the crypto community. The term refers to the hypothetical point at which ether, the native token of the ethereum network, overtakes bitcoin in market capitalization to come the largest cryptocurrency.

  1. These conditions make the flippening more likely, according to crypto experts.
  2. Smart contracts are used to automate the agreement terms between the participants of the protocol thereby eliminating the need for trust, as well as intermediaries.
  3. Dencun is essentially the fusion of two separate upgrades – ‘Deneb’ and ‘Cancun’ together targeting improve…
  4. It is often used to refer to the possibility of Ethereum overtaking Bitcoin as the largest cryptocurrency by market cap.
  5. Crypto prices are volatile and will likely continue to be since the technology is still developing and rapidly changing.
  6. This form of ledger technology is what’s behind cryptocurrencies and other tech trends.

Bitcoin was created to bypass the intermediaries and middlemen upon which the world’s financial system had to come rely. Ethereum’s purpose, on the other hand, is to create a network on top of which applications may be built unrestricted to finance. There can never be more than 21M bitcoins of which over 19M have already been minted.

Insider spoke with crypto experts to help break down the concept of “flippening”. They shared their predictions on when it might happen and the market implications of the event. The total value locked in DeFi smart contracts has grown from around $1B in June 2020, to around $50B a year later. Aave currently supports over 20 different cryptocurrencies and as of the end of June 2021, has over $16B in total value locked (TVL), a common metric to measure the amount of assets locked in a protocol.

DeFi is perhaps one of the most interesting and fastest growing trends in the space. The general idea behind DeFi is the development of non-custodial financial products and services written in code and deployed on the blockchain. In traditional finance, banks are a necessary intermediary, and are trusted to maintain a ledger which keeps a list of transactions. 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. The total USD value of fees paid to make a transaction on the network (100% means Ethereum has flipped Bitcoin in that metric).

When Will the Flippening Happen?

ZkSharding is a re-introduced concept of Ethereum’s sharded execution layer which scales blockchains with p… Dencun is essentially the fusion of two separate upgrades – ‘Deneb’ and ‘Cancun’ together targeting improve… Both use cases are attractive, and the market will decide if digital oil or digital gold will be more in demand. Get early market exposure to all crypto market segments, from Metaverse to DeFi with our cross-chain ecosystem.

what is the flippening

Members’ votes are tallied, and changes are implemented automatically without the need for an intermediary. While there have been many attempts at creating a digital currency, bitcoin is by far the most successful. It is also the inspiration for every cryptocurrency that came after it. 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.

This allows for strangers to efficiently, openly and transparently collaborate in a manner that is truly unprecedented. Bitcoin 3.0 represents the next evolutionary phase of Bitcoin mining, characterized by its potential to bec… Trust Wallet is a crypto wallet software that gives its users complete ownership of their crypto funds. “I view the two as distinct, and whether they ‘battle’ for the top spot on CoinMarketCap is more noise than signal,” Thorn said.

Total Transaction Fees

The success of DeFi applications could lead to more people investing in Ethereum, thereby boosting its value. Before we dive into the Flippening, it’s essential to understand the concept of market capitalization. Market cap is a measure of a company’s or asset’s https://www.wallstreetacademy.net/ value, calculated by multiplying the price of a single unit by the total number of units outstanding. 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.

The term “Flippening” refers to the hypothetical moment of Ethereum (ETH) overtaking Bitcoin (BTC) as the biggest cryptocurrency. Even though market cap is the main metric to determine “The Flippening” (above), there are a number of other metrics that can be observed (below). If Ethereum usage continues to rise, and supply begins to contract, these two forces combined could lead to a flippening. 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.

The flippening is a term used to describe a hypothetical event where one cryptocurrency surpasses another in terms of market capitalization. While the flippening between Bitcoin and Ethereum has not yet occurred, it remains a topic of interest and speculation within the crypto community. Factors such as market capitalization, technological advancements, network activity, and regulatory environment can influence the likelihood of a flippening. If a flippening were to happen, it would have significant implications for the cryptocurrency market, including shifts in market sentiment, investor behavior, media attention, and competition and innovation. Another factor that could contribute to this phenomenon is the cryptocurrency’s utility. Ethereum is sometimes referred to as “digital oil” because it facilitates smart contracts, the creation of dApps and DAOs, and supports creators through non-fungible tokens (NFTs).

While Bitcoins could still be worth more in dollar terms, the total market capitalization of all coins added together would flip. The Flippening is the hypothetical moment when Ethereum’s market cap surpasses that of Bitcoin. This would mean that ETH becomes the largest cryptocurrency by market capitalization, overtaking BTC. In recent months the term has also been used in reference to different cryptocurrencies. Recently, Twitter users have been using it to describe shiba inu surpassing dogecoin as the largest joke cryptocurrency by market capitalization.

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. A minority think that the flippening could have a significant impact. The protocol facilitates automated transactions between cryptocurrency tokens on the Ethereum blockchain through the use of smart contracts. The Flippening does not necessarily mean that the value of Ether (ETH), Ethereum’s native currency, has to surpass Bitcoin’s value.

This explains why it’s even now the most valuable and popular cryptocurrency. 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. Every node owns a copy of the blockchain, and changing the records in one node does not change the information stored on others. 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.

Ether supplanting bitcoin matter of when not if

The term “Flippening” has been gaining much attention in cryptocurrency in recent years. It refers to the hypothetical moment when Ethereum (ETH) overtakes Bitcoin (BTC) as the largest cryptocurrency by market capitalization. While market cap is the primary metric used to determine the Flippening, it’s not the only one. Ethereum has flipped Bitcoin if metrics like transaction count are considered.

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. 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.

Active Addresses

“The term ‘flippening’ began appearing in social media such as Twitter and Reddit in February 2017,” said EQONEX’s Ting. These conditions make the flippening more likely, according to crypto experts. In uniswap, liquidity providers provide liquidity and earn fees by depositing tokens which are then used by traders to facilitate exchanges from one token to another. Aave is an open source and non-custodial liquidity protocol for earning interest on deposits and borrowing assets. This would make those offerings open, transparent and accessible to all without the need for middlemen.

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