The Capital
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The Capital

ETH Could Overtake BTC In Market Cap

Can Ethereum possibly overtake Bitcoin in market cap?

Cryptocurrency With Different Architectures

Although Bitcoin and Ethereum both use cryptocurrency and blockchain technology(BTC and ETH respectively), they are not the same. Bitcoin’s purpose is becoming more of a store of value like a bank, while Ethereum is a world computer platform for decentralized applications. Ethereum is becoming more of a transaction and settlement layer.

Metcalfe’s Law

Raoul Pal uses Metcalfe’s Law to explain how Ethereum can flip Bitcoin. Metcalfe’s Law is most often used in engineering, specifically in telecommunications and data networks. How this relates to cryptocurrency is through the network effect. This states that:

The Flippening Index

The Blockchain Center uses a metric called the Flippening Index. This index looks at 8 different metrics that compare the Bitcoin and Ethereum network. The metrics are the following:

  • Active Addresses (In Digital Wallet) — The number of unique addresses that send or receive a transaction in a given week.
  • Transaction Count — Shows the relation of total onchain transactions that happen on the network.
  • Transaction Volume — Total amount of USD that gets sent over the network.
  • Trading Volume — Exchange trading volume for BTC and ETH.
  • Total Transaction Fees — USD value of fees paid to make a transaction on the network.
  • Node Count — Publicly reachable nodes on each network.
  • Google Searches — Analytics figures for Google searches regarding Bitcoin and Ethereum.

Synopsis

There is no expected date when the flippening will occur or if ETH will actually flip BTC. Right now, these are all assumptions based on data. You can call it an educated speculation if you are skeptical of the possibility it can happen. Either way, whichever cryptocurrency becomes the larger in market cap, they will be priced differently. ETH does not have a fixed supply, thus, the market cap may be higher but not the price value per coin. The Ethereum network is going to implement EIP 1559 though, as a deflationary mechanism for ETH supply. BTC, on the other hand, is worth much more per coin because of its finite 21 Million supply.

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Vincent Tabora

Editor HD-PRO, DevOps Trusterras (Cybersecurity, Blockchain, Software Development, Engineering, Photography, Technology)