If you’re ever asked to name two cryptocurrencies, chances are the first two assets are bitcoin and ethereum.

There is a good reason for this, as both are the two largest cryptocurrencies in the world by market capitalization. While Bitcoin has always been the most dominant form of digital currency, Ethereum has always been the most popular altcoin in the world. While bitcoin’s dominance may one day diminish, some experts suggest a “flipping” could happen sooner rather than later.

Bridging the Gap: What is Flipping?

There is little doubt about bitcoin’s status as the world’s best-known cryptocurrency. The wild bull run of 2021 saw BTC’s market capitalization climb to $1.2 trillion before collapsing in the “crypto winter” of 2022.

For Ethereum, the rally to a $500 billion market cap was equally surprising, but a return to less than $200 billion in 2022 shows that BTC still reigns in terms of size.

However, talk of Ethereum rising to overtake bitcoin is nothing new, and the topic around flipping—the act of ETH “flipping” BTC’s position at the top of the table of the largest assets based on market capitalization—has been discussed by many. Cropping for years. Now.

Virtually all commentators agree that volatility will be confirmed when Ethereum’s market capitalization surpasses that of bitcoin.

Given the age and reputation of BTC, this may be a tall order for any project, but history shows that the two assets have been remarkably close in the past and the current trend is one of decreasing dominance for Bitcoin and one for Ethereum. indicates a slight increase.

While there is still a roughly 20% gap between BTC and ETH in terms of market dominance, the gulf is at its lowest point since early 2018, and the rise of new projects appears to be pushing investors away from bitcoin. while embracing more of Ethereum’s blockchain ecosystem. ,

However, much work remains to be done. At the time of writing, Ethereum’s market cap of $155 billion is less than half of bitcoin’s $327 billion. This means we would need to see Ethereum’s current value more than double for it to flip with Bitcoin remaining stable.

Ethereum is more functional than bitcoin

The prospect of experiencing such exponential growth while bitcoin remains stable may seem unlikely, but recent developments to Ethereum’s blockchain certainly improve the asset’s performance compared to its competitors.

While bitcoin’s primary function is as a store of wealth for investors, Ethereum boasts a programmable blockchain and has become an essential hub for crypto developers.

As the cryptocurrency ecosystem continues to welcome increasingly advanced decentralized applications (dApps), various other decentralized finance services, NFTs, and other digital instruments, Ethereum has been placed front and center of a vibrant new landscape.

There are about 3,000 different dApps built on Ethereum’s network, and statistics show that this figure is growing steadily.

Given that Ethereum is recognized as a highly functional space for hosting decentralized services, it is likely that the network will continue to grow in the era of Web3 and the Metaverse. These scenarios thrive on blockchains that have great utility, and in this regard, ETH offers something that is too primitive for BTC to emulate.

rise of digital oil

Bitcoin’s store of wealth has presented the asset as “digital gold,” but if this is the case, Ethereum should be considered “digital oil” thanks to its supreme level of utility today.

At the core of this utility are Ethereum’s smart contract functions, which were added to the blockchain in 2015. Some 3,920 developers were added to the Web3 ecosystem in 2021, helping Ethereum cement its place as the blockchain network with the largest amount of active builders. ,

Furthermore, Ethereum is constantly expanding its functionality. For example, in August 2021, Ethereum introduced a burning mechanism for its cryptocurrency, ether, classified under EIP-1559 and included in the London hard fork. This empowered the network to use flat rate fees instead of auction-based transaction fees on the network.

The Ethereum Foundation, led by the asset’s co-founder Vitalik Buterin, is supporting these network improvements.

Importantly, Ethereum will undergo “The Merge” in September 2022, a long-awaited shift to a proof-of-stake consensus model that promises a 99.95% reduction in energy use across the entire network.

This transition paves the way for more scalability upgrades to make Ethereum 2.0 a reality, including sharding, which could help increase network capacity and transaction throughput.

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