It sounds like the name of some obscure horror movie, but ‘the flippening’ is something that continues to generate plenty of debate in crypto circles. In fact, now that Ethereum (ETH) is close to its long-awaited shift to proof-of-stake, it has begun attracting more attention than ever before, particularly amid claims that ETH will become a deflationary asset following this shift.
This is certainly a contentious issue, particularly when ‘the flippening’ can mean more than one thing. Yet there’s general agreement that ETH will flippen bitcoin (BTC) on at least some metrics, even if there’s plenty of disagreement as to whether it will become more valuable in terms of market capitalization.
At the same time, commentators tend to agree that even if the flippening does happen (at least in some respects), it wouldn’t diminish BTC’s current status as a store of value.
“The notion of ethereum ‘flippening’ bitcoin has been around since at least 2017. In the original sense, it meant that ethereum would become a number one cryptocurrency on coin ranking sites such as CoinMarketCap,” said Josef Tetek, Brand Ambassador at SatoshiLabs and Trezor.
In this sense, ETH would need to reach a price of BTC 0.156 per unit in order to flippen its rival, although, at the time of writing, it stands at around BTC 0.0774. It means that ETH should more than double in price while the price of BTC should stay at the same level. Given this gap, Tetek sticks his neck out and says he doesn’t think a flippening in this sense “will ever” happen.
“Ethereum has briefly reached a price level of ~0.14 bitcoin in June 2017 and has posted lower highs since then,” he told Cryptonews.com.
Other industry figures take more of a mixed view. That is, they think the flippening is unlikely in terms of market capitalization, but nonetheless possible.
“Some say that because ethereum will be deflationary after the Merge, it will then have the same characteristic of scarcity that made bitcoin soar — AND because in addition, ethereum also has actual utility as gas for a settlement layer — these two things combined will make ethereum more valuable than bitcoin ultimately,” said Boolean Fund general partner Mark Jeffrey.
For Jeffrey, there is a chance that, post-Merge, Ethereum becomes the primary ‘cash-like’ settlement layer for much of the crypto ecosystem.
“But that is still far from a done deal, however — Ethereum is still slow and unscalable, and it has a year or two to go yet to catch up to Avalanche, BNB [chain], Solana, Fantom, and others that are fast, cheap, scalable and here now,” he told Cryptonews.com.
That said, ‘flippening’ doesn’t necessarily mean ethereum overtaking bitcoin in terms of market capitalization. As Polygon (MATIC), an Ethereum scaling platform, co-founder Mihailo Bjelic explains, it can also refer to different stats such as daily trading and transaction volume, as well as other areas.
“Recently, ether flipped bitcoin in the options market for the first time, reaching a total of USD 5.7bn in open contracts versus bitcoin’s USD 4.3bn. This shows that ETH is seemingly becoming a more popular trading tool than BTC,” he told Cryptonews.com.
Bjelic also suggests that ethereum will only gain momentum following the Merge, meaning that we may eventually have to update our conceptions of what’s possible.
“Additionally, Ethereum might as well flippen Bitcoin in terms of its prominence and importance for the industry. Bitcoin is the project that started the industry and as such is incredibly significant, but the astounding level of innovation, use cases and adoption happening in Ethereum might easily make it the flagship project and the first association when our industry is mentioned,” he added.
Assuming that Ethereum flippens Bitcoin in one way another, how would this affect the latter? Would any flippening somehow affect BTC’s value or standing?
“It would be about Ethereum becoming more valuable, and would not diminish Bitcoin,” argued Mark Jeffrey, who added that both cryptoassets/platforms serve two very different economic functions.
“Bitcoin’s proof-of-work will always retain the very highest degree of imperviousness and security. That could become increasingly valuable in the coming years — it should not be underestimated,” he said.
Mihailo Bjelic agrees with this analysis, affirming that Bitcoin’s inherent value lies in its potential to be a quasi-gold standard and store of value.
“At the same time, Ethereum serves as the backbone of Web3, propping up the DeFi and NFT ecosystems, among others, that comprise numerous interconnected platforms. So this is more about Ethereum increasing in value rather than Bitcoin losing its own,” he said.
Josef Tetek takes a stronger view in Bitcoin’s favor, particularly when Ethereum will be moving to proof-of-stake soon enough, which in his view isn’t as robust as proof-of-work.
“I don’t think Ethereum is sufficiently decentralized to stay neutral and permissionless – and I fear its upcoming move to a proof-of-stake consensus mechanism will make it even more vulnerable to a regulatory capture, as the stake seems to be concentrated among a handful of institutions,” he said.
While a flippening may not really harm Bitcoin’s position and its inherent value proposition, it could have an impact on the wider crypto ecosystem in various ways.
“I don’t think that any kind of flippening would ‘harm’ crypto, but it may reduce the appeal of competing layer-1s [base protocols], i.e. Ethereum competitors. One possible shift in focus would be taking cryptocurrency from a single popular use case to a multitude of use cases that Ethereum and solutions like Polygon can support,” said Mihailo Bjelic, who claims that such a shift would be very beneficial for the industry.
Mark Jeffrey also says that any kind of flippening would be a net positive for crypto, since it would ultimately mean that Ethereum has attracted more usage and adoption. And given that the crypto market tends to rise and fall more or less as a whole, it would likely increase usage and adoption across the board.
He says, “Any crypto ecosystem succeeding wildly is good all around — it only increases adoption and innovation. Some parties will always value bitcoin’s better security — as ethereum is more broadly used, some percentage will always take their winnings and store it in native bitcoin for increased security.”
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