Investment Analyst @ SenseTime. Founder of Worthyt. MIT Sloan 2020.
If you’ve been in the cryptocurrency space for more than a month, chances are you’ve come across the term Flippening. As silly as it may be to pronounce, the term refers to the foretold event in the possible future that Bitcoin will be dethroned by another cryptocurrency. One of the major contenders for the championship belt has been Ethereum. In the current midst of the ongoing Bitcoin Crash, this legend is inching toward a possible reality.
A couple of weeks ago, I published an article about the 9 Rules of Crypto Trading that focused on rules that Miles follows. He’s one of the founders of Pure Investments, which is a Discord community that focus on cryptocurrency signals. Recently, he published a video on the official Pure Investments YouTube Channel regarding Ethereum and the Flippening.
Miles is a strong believer in the Flippening. While Bitcoin sustains its current dominance, Miles believes that Ethereum’s strong value proposition will eventually outshine the current champion — with strong reason. One of the major points that Miles argues is the “First to Market Dominance” claim with Bitcoin. Analogously, we have seen empires like Best Buy and BlockBuster crippled by innovative competition from the likes of Amazon and NetFlix. Apart from this, Miles also argues that…
Bitcoin, which is a behemoth that is becoming very comfortable on its throne, cannot offer the blockchain confirmation speed (well, arguably it can in the future with Lightning Network) of Ethereum. If you’ve tried to send Bitcoin during a market correction, you’ll know how much each second counts; in fact, Bitcoin Cash, a direct competitor to Bitcoin, has even been accused of exploiting Bitcoin’s confirmation weakness in the past to congest the blockchain (look up the conspiracy Operation Dragon Slayer).
Bitcoin also does not have smart contract capability, which is what gave Ethereum many more use cases beyond transactional value. It is the foundation of the majority of past and current ICOs in today’s cryptocurrency market.
Bitcoin’s notorious transaction fees, which are partly attributed to its scalability issue (which goes back to blockchain confirmation congestion), have been reported to hit an average of $28 per transaction mid December. This makes micro-transacting a losing game. Coffee shops can’t take Bitcoin purchases for $2 coffee if the user will end up paying $30 including transaction fees. Again, the Bitcoin community is actively working to solve this issue with the Lightning Network.
This is a common practice for users going through Coinbase/GDAX, which is a gatekeeper for a majority of US investors. While Litecoin (and now Bitcoin Cash) is an alternative option, the added benefit of transferring Ethereum is the fact that many exchanges have Ethereum marketplaces, too. This means that as soon as the Ethereum enters an exchange like Bittrex or Binance, a user can start trading it for coins that he or she wants.
Proof of Stake is the new way of mining. In a nutshell, Proof of Stake lets you mine a coin by simply holding on to the coin. This means that, if you hold Ethereum, you will be “mining” more Ethereum, without having to actually set up a mining rig, buy expensive graphics cards, and consume electricity, which is the current way of mining, called Proof of Work. Apart from how expensive Proof of Work can be, it is harmful for the environment, too. Bitcoin’s mining power, which still uses Proof of Work, is estimated to consume about as much electricity as Ireland.
You can mine by simply holding Ethereum, so why not buy more Ethereum and hold it? With this logic, the price of Ethereum is expected to increase as sellers are more incentivized to hold their Ethereum.
This adds privacy to transactions on the Ethereum blockchain. Privacy coins have been a big trend in the market recently, and we’ve seen the market’s interest through coins that have mooned like Verge (XVG), which has grown by almost 4,000x since 2016.
Funny, because while I wouldn’t picture Vitalik as the figure of pristine human health, it is true that Ethereum’s core development team is much more active and responsive than the Bitcoin team. In fact, we don’t even know who Satoshi Nakamoto, the creator(s) of Bitcoin, is. The name is a pseudonym, and it could be a person, organization, government, or AI? While this may sound cool and mysterious, it also means we don’t know the true intentions of Bitcoin apart from its whitepaper, which may be an issue.
Forks are clones of a current code-base that is modified with a different vision. Let’s face it — this happens because people don’t agree. With Ethereum, we see the current version as a fork of Ethereum Classic, which was a fork to strengthen security against future attacks similar to the DAO. By contrast, the Bitcoin community has attempted/executed forks including… Bitcoin Cash, Bitcoin Gold, Bitcoin Diamond, and SegWit2x. The community is not unified.
Despite the features and value proposition of Ethereum that arguably make it superior to Bitcoin, the cryptocurrency community is well-aware of the financial forces that are entering the market. With futures trading from CME and CBOE, a large influx of institutional investors are starting to keep a keen eye on Bitcoin as well as other cryptocurrencies. Meanwhile, if you are keen to keep up-to-date on the flippening, take a look at a website dedicated to it: http://www.flippening.watch/
What do you think? Will the flippening happen, or will Bitcoin continue to hold the championship belt? Feel free to post your opinions/discussion in the comments below, or talk with us in the Pure Investments community:
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