Since Bitcoin was unleashed on the world in 2009, its dominance of the cryptocurrency market has been unchallenged. But as the price of other cryptocurrencies have surged over the past few weeks, there's speculation that the total dominance of bitcoin may be coming to an end as investors dump their money into other cryptocurrencies—a phenomenon referred to as "the flippening."
Over the past month and a half, cryptocurrencies have experienced an unprecedented explosion in market value, although the two leading cryptocurrencies—bitcoin and Ethereum—enjoyed the bulk of investments. Bitcoin broke $3,000 USD for the first time on Sunday, but all eyes were on Ethereum which peaked at $420 early Monday morning—a 4,000 percent increase in value since January of this year.
Posters on Ethereum subreddits were understandably enthusiastic about this brief uptick in value (the value of the Ethereum token, Ether, has since returned to around $350), but the mood on bitcoin forums was cautiously optimistic at best and totally despairing at worst. This is because the surge in Ethereum prices is a telltale sign of the approach of the flippening, which would mean that bitcoin was no longer the number one cryptocurrency on the block.
Price isn't the only metric to consider, however. In some ways,, Ethereum—often touted as the "silver to bitcoin's gold"—has already surpassed bitcoin. It has almost five times as many nodes in its network as bitcoin, meaning more people are using their computers to support it, confirms new blocks every 12 seconds (compared to ten minutes for bitcoin), and has a larger number of transactions per day.
Arguably, the only areas where it has yet to surpass bitcoin are raw value (one bitcoin is worth nearly five times the amount of one Ether) and market capitalization, the measure of the total market value of the coin. At the time of this writing, bitcoin's market cap is around $45 billion and Ethereum is around $35 billion.
Closing a $10 billion gap in market cap is nothing to bat an eye at, but Ethereum has risen from a market cap of $2 billion in just two and a half months. Based on this exponential growth, there is rampant speculation that Ethereum will surpass bitcoin in total market value within a matter of weeks, at which point the flippening will have occurred. According to the main site for tracking the flippening, assuming that the number of bitcoins and Ether in circulation remain the same, bitcoin would have to drop to $2,182 or Ethereum would have to rise to $496 before the two cryptocurrencies had an even market cap.
It's still not clear exactly what fueled this meteoric rise in the market cap of Ethereum, or bitcoin for that matter. Some have speculated that it is a result of Ethereum being adopted by Fortune 500 companies in the Enterprise Ethereum Alliance and a misunderstanding by speculators as to what, exactly, Ethereum is for. Unlike bitcoin, which is a pure cryptocurrency insofar as its only meant to facilitate peer to peer financial transactions, Ether tokens are not meant to be a store of value. Rather, they are to be used as the gas that keeps the Ethereum network—and the apps built on top of it—running.
It also likely has to do with the increasing popularity of Initial Coin Offerings, or ICOs. Not unlike a corporation issuing its first shares, Ethereum app companies host a crowd sale where anyone can cash in their Ether for token, which they hope will become more valuable as the company releases its products. So far, ICOs have raised insane amounts of money—in a few instances Ethereum upstarts have sold $50 million worth of tokens in a matter of minutes.
The anticipated dethroning of bitcoin as the largest cryptocurrency in the world has been met with mixed reactions.
On the popular Ethereum subreddit r/ethtrader, today's top post encourages Ethereum enthusiasts to not be jerks about Ether surpassing bitcoin in value and to welcome the bitcoin crowd into its market.
On the r/BTC, a popular bitcoin subreddit, however, the top post warns that "the flippening is nigh" and a number of posts in the thread ask "how did we fuck up?"
The bitcoin community also appears to be looking for someone to blame, and the same post calls for the "excommunication" of Blockstream, a bitcoin app developer that has been blamed for causing a rift in the bitcoin community that many think has severely limited the cryptocurrency's potential. As Motherboard staff writer Jordan Pearson pointed out earlier this year, the divide is mainly between those who want bitcoin to be deployed as a populist spending tool more akin to PayPal, and a purist community who see bitcoin as a radical alternative to national fiat currencies.
But even if the flippening is nigh, this doesn't spell the end of bitcoin—not by a longshot. After all, it's benefited from the same price jump as Ethereum.
As the original cryptocurrency, bitcoin has a legacy of dependability behind it and is increasingly being adopted as a legitimate form of payment by businesses and governments (Japan recently recognized bitcoin as a legal method of payment). Moreover, the future of Ethereum prices is uncertain as the network looks to a code change that will render current mining techniques obsolete.
For now, however, Ethereum enthusiasts are taking time to enjoy the ride.
Disclosure: the author owns some ether and bitcoin tokens.