Cryptocurrencies have their own lingo. And one term that is getting a lot of attention recently is the flippening.
The flippening refers to the moment when bitcoin cedes its market dominance to other “altcoins,” signaling a shift where other networks become significant players in the cryptocurrency economy.
It’s kind of like the crypto world’s version of the singularity, which is when artificial intelligence becomes so sophisticated and advanced that it (or they) create a self-replicating, humanity-dominating super machine.
The big question is whether the flippening really matters and whether a significant change in bitcoin’s market dominance will be anything like the rise of self-determining autonomous robots.
Cryptocurrency market cap and market dominance
Bitcoin was the first cryptocurrency that achieved major adoption and widespread use. For some useful background, check out The Age of Cryptocurrency — How bitcoin and the blockchain are challenging the global economic order, and Digital Gold: Bitcoin and the inside story of the misfits and millionaires trying to reinvent money.
Currently, (at the time of this writing) it has a market cap of around $ 43 billion.
It’s worth noting, that despite the impending flippening, bitcoin’s market cap continues to grow. The only thing that’s changing is bitcoin’s share of the market relative to other cryptocurrencies.
Since its inception, and by the nature of being the first of its kind technology and enjoying the network effect, bitcoin has dominated the cryptocurrency market.
Really, until recently, the bitcoin market was the cryptocurrency market.
But that’s changing. And while there are a lot of mixed emotions and various points of view on what this all means, it does seem like competition, diversity, and the development of new crypto projects are all good for the new digital asset economy.
It’s also probably true that having multiple points of entry into the crypto economy will help with accessibility and mainstream adoption.
So here’s the thing about the flippening: There are more factors at play than just the straight up market cap.
Other key indicators include:
— the number of transactions on the network
— trading volume
— how many nodes are running the network across the world
— how much miners are making to maintain the network
These numbers for bitcoin and for its nearest competitor, ethereum, change daily, but the point is ethereum is getting close, or in some cases already surpassing bitcoin in a couple of the areas listed above.
Check out this website for a daily breakdown of the flippening indicators.
The flippening isn’t just about market share, it’s also about the general health and viability of competing networks, and looking at all of the ways that those networks generate value.
When does an “alt coin” lose its label?
So in the case of the flippening we are talking about a horse race of sorts between bitcoin and ethereum.
Lots of bitcoin early adopters, purists, bitcoin maximalists — people that believe that bitcoin is the only legit protocol and all others are scams and imitators — are looking at the flippening like a loss or the end of bitcoin’s golden days.
But really, maybe the biggest thing that’s happening is an acknowledgment that it is time to stop referring to ethereum as an “alt coin” and accept it as a legitimate and valuable piece of the crypto economy.