Flippening — A real danger to the Bitcoin’s supremacy
I had never heard of the word Flippening till about a few months ago when it started to trend on the Cryptoverse. It didn’t take me long to figure out what it meant & why the term was coined. So much so that they have a website dedicated to this phenomenon called Flippening Watch. This website has an interesting chart showing ETH/BTC Market Cap Ratio deducing the
percentage to Flippening — currently the chart is hovering just around the 50% mark based solely on this metric. But there are other valid reasons making Flippening a real possibility which I will discuss later.
Let’s start off with a basic definition according to which Flippening refers to some possible future event when Bitcoin is replaced from the top spot of the crypto world by some altcoin — the top contender being Ethereum right now with the strong foundation behind it. This theory has gained a lot of traction in the recent months with the bitcoin’s dominance falling from around 90% in early 2017 to roughly 38% at the time of writing.
I was so intrigued by the idea of Flippening that I did a survey my Twitter feed to find out which cryptocoin did people think had the potential to succeed Bitcoin as the champion coin & I was a little surprised to see the results. People chose Ripple as the top contender with 40% while Ethereum was only ahead of Bitcoin cash behind other Altcoins! I beg to differ here with the reasons coming up. The crypto market is in a constant state of flux & at almost 10 years old Bitcoin has become less competitive & complacent in its ways at the top of the cryptoverse. The strong utility value that Ethereum presents overall makes it a strong contender for the top spot.
Ethereum (ETH) was made as a serious alternative to Bitcoin when it was launched in 2015. Bitcoin is founded on proof-of-work (PoW) which requires the solving of very complex calculations to mine coins and confirm transactions costing tons of money in electricity costs & massive computing power apart from taking 10 minutes to verify a single transaction compared to 14 seconds for ETH.
Ethereum is moving to proof-of-stake (PoS) with the much anticipated Casper upgrade which is way faster and doesn’t include mining. Essentially, those who have around 1000 Ether could become stakers or miners. The amount of Ether staked will determine the annual dividend paid back to the staker based on transaction fees. This will increase the speed of Ethereum transactions dramatically. It will also make Ethereum easier to scale and help with further mainstream adoption. The Casper upgrade, which will bring proof-of-stake, will also lower security maintenance costs and reduce energy consumption by erasing mining. Here is a visual to help you understand.
The smart contract ability of the Ethereum platform gives it a huge edge over Bitcoin with its platform capability where other crypto coins can be launched as well, contributing to the mushroom growth of ICOs in the past 12 months. At the time of writing we have 1517 tokens available as being reported on Coinmarketcap. Beyond Ether’s transactional value it provides the basis for the foundation & expansion of the crypto market.
Cost & Speed
Bitcoin is notorious for high transaction costs & slow speed which doesn’t make it an ideal digital currency for micropayments — bitcoin transaction costs $2.12 compared to about $0.67 of Ether at the time of writing. However for bitcoin, this is still a massive improvement over the $55 transaction cost in mid December 2017 thanks to the upcoming Lightning Network which is basically a digital freeway with smart contract capability, where the bitcoin blockchain is connected to an alternative payment network thus avoiding the blockchain congestion. ETH’s answer to that is The Raiden Network (work in progress) which is an off-chain scaling solution, enabling near-instant, low-fee and scalable payments for Ethereum based tokens.
Numerous forks have been done on the original bitcoin code to address the issues of scalability, security, transaction speeds & costs (Bitcoin cash, Bitcoin Gold, Bitcoin Diamond, Segwit2x etc.) with a couple of failed hard forks as well — this signifies the lack of unity between the Bitcoin community apart from trying to address the issues. As discussed earlier ETH is moving to PoS with the Casper upgrade by which current Ether owners can mine more causing a further surge in the price of the coin.
Bitcoin transactions are on a public blockchain where the bitcoin wallets are tied to address hashes which once identified can lead to revealing all current & future transactions. The zk-SNARK update adds the much needed privacy feature to Ethereum transactions keeping it competitive with other security focused coins like Dash (DASH), Monero (XMR), Zcash (ZEC) & Verge (VXG) which have been in high demand recently.
Ethereum’s core team is very active & responsive one — with the genius programmer Vitalik Buterin at the helm of affairs — although on the lighter side of things his recent tweet regarding cryptos falling to zero didn’t exactly qualify him as a Financial advisor with the crypto lovers. And as for bitcoin we don’t even know who Sataoshi Nakamoto (pseudonym) is — a programmer, a corporation, some government or maybe a supercomputer!
Honorable mention for Ripple (XRP) — the third most valuable cryptocurrency with the market cap of $37 billion at the time of writing, across the board acceptability by the banking sector with a minimum transaction fees & can process 1500 transactions per second. The only drawback for Ripple has been the centralized nature of the crypto — it is actually owned by a corporation. However they seem to be moving towards decentralization with the recent release of “the Ripple papers” which involves managed decentralisation, in the form of adding independent validators to the network. Who knows Ripple might turn out to be the dark horse after all! Some other impressive coins that have huge potential with regards to mainstream adaptability, scalability, privacy, instant transactions & zero fees are Cardano, Stellar, Nano & EOS. Keep an eye on those. Time to wrap up. If you like to receive trade ideas & technical analysis on Stocks, Forex & Cryptos you can follow me on Twitter & Stocktwits or @fakd on the Tradealike app for real time alerts. Also you can get your questions answered on these topics on my #AMACrypto.