In this article, you will learn what is the meaning of the flippening. As the market cap of Bitcoin continues to decline, murmurs of the flippening have begun to surface. Bitcoin was the first cryptocurrency to market. The flippening is a theoretical scenario where the market cap of Ethereum overtakes that of Bitcoin to become the dominant cryptocurrency.
How Does The Flippening Work?
The flippening is a term used to describe a potential “flip” in the largest cryptocurrency. Specifically, it refers to the possibility of the second-largest cryptocurrency, Ethereum, overtaking Bitcoin.
For the Flippening to occur, the price of Ethereum doesn't have to top that of Bitcoin. Market cap is calculated using the total amount of particular cryptos in circulation multiplied by its price.
How Does The Flippening Work?
In the crypto world, market capitalization refers to the total value of a given cryptocurrency. In principle, it is calculated the same way market capitalization is for a company: total shares outstanding multiplied by price per share. For crypto, the concept is essentially the same: the number of coins in circulation multiplied by the price per coin.
Given this dynamic, a faster-growing price of ether in relation to Bitcoin would help make the flippening occur. Or, Ethereum's price simply outperforming Bitcoin over time could also cause a flippening.
The second component of this equation is total coins in circulation. Paired with the price of each crypto coin, a faster-rising supply of ether in relation to Bitcoin could also cause a flippening. Ethereum has no cap on the total supply of ether that can be created. However, Ethereum 2.0 -- a switch to a proof-of-stake system that's set to be complete sometime during the summer of 2022 -- will theoretically reduce the total supply of ether in circulation over time. A lower supply could help boost the value of Ethereum over time as well.
By contrast, Bitcoin has a hard cap of 21 million coins, which will be reached in 2040. As of June 2022. almost 19.1 million Bitcoin has already been mined. A gently rising supply in the next couple of decades could also keep Bitcoin's total value rising and preventing a possible flippening.
Will Flippening Happen?
Experts are divided when it comes to The Flippening, with some arguing that it'll never happen, while others think it's just a matter of time. Both camps rely on different factors to substantiallyate their claims.
For instance, one of the reasons often touted by those who don't think Bitcoin's market cap dominance can ever be overtaken by another crypto is the impending approval of a spot Bitcoin ETF, which they argue will give institutional investors a direct path to invest in the crypto, taking the crypto to unprecedented levels.
Conversely, those who think Ethereum is poised to overthrow Bitcoin, bank on the crypto's large ecosystem with millions of non-fungible tokens (NFTs) and thousands of decentralized apps (Dapps). Then there's the upcoming Ethereum Merge, which will transform the Ethereum blockchain from proof-of-work to proof-of-stake.
Bottom Line
We are in the midst of a bear market, and while Ethereum seems to be recovering a lot better than Bitcoin, the chances of the flippening happening during a market downturn are fairly remote. This article is about what is the meaning of the flippening.
