Flippening Meaning
What is Flippening?
Ethereum is the second largest cryptocurrency by market capitalization, behind Bitcoin. The “Flippening” was coined in 2017 to describe the possibility that Ethereum’s overall market value could someday outweigh Bitcoin’s.
The speculation is based on the idea that Ethereum is flexible, especially its ability to support the creation of decentralized applications (dApps) and smart contracts. 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. That said, this hasn’t hasn’t happened yet.
How Does Flippening Work?
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. Reducing the supply of Ether over time could also potentially cause a Flippening, as the scarcity would increase its value.
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). The success of DeFi applications could lead to more people investing in Ethereum, thereby boosting its value.
Ethereum has flipped Bitcoin if metrics like transaction count are considered. It also briefly outperformed Bitcoin in transaction volume during the 2021 bull market. Generally, Bitcoin still dominates the market in terms of trading volume, Google search keywords, market capitalization, and active addresses.
It is important to note that a Flippening 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.