Crypto-Twitter loves throwing contrarian opinions to the left and right. However, there's one I believe we need to bring up more again; bitcoin losing its first place, aka "the flippening".
I want to explore the reasons why it could happen, and why not.
While this has been discussed before during the previous bull run, I'm taking this ETH/BTC bear market opportunity to review it again, without the euphoria.
We've seen many situations where the first technology didn't win the race. Being from Estonia, the closest case for me is the Finnish company Nokia. It was the world's largest mobile phone manufacturer for 14 consecutive years until it got out-innovated by Samsung and Apple.
Losing the race to the competitors always has to do with the network effect; once you start losing it, it's almost impossible to gain it back.
So, let's look at some reasons why it might or might not happen with Bitcoin.
Events supporting the flippening:
Better underlying technology proves to be successful. The best example is Proof-of-Stake (PoS), which reduces energy expenditure. While PoS is more scalable and more resource-efficient, it still needs time to prove its existence in practice.
A stronger product-market fit - blockchains are mostly for developers, who will then take it and produce better products for the end-users. If the majority of developers will keep building on other chains, the market will probably price it accordingly, resulting in a more significant network effect.
Another chain manages to continue the growth of its community to a bigger scale. With blockchain, there is no doubt that the more significant (long-term & active) community it attracts, the bigger the chain will be.
Events not supporting the flippening:
If bitcoin manages to make successful adjustments in its underlying tech to attract the developers from other ecosystems, although currently, Bitcoin developers are firmly against it.
A technical catastrophe on one or many competing chains, although there are many ways how to manage situations like these (for example hard forking it).
The failure of adopting other blockchain use-cases in the real world by other chains, besides being a digital gold or store of value.
As of today, Ethereum is best positioned to challenge Bitcoin. There are many other chains, but none of them is even close to gain the amount of traction Ethereum has received during the past years:
Bitcoin is purposely being kept as a technology that won't change over time, supposedly to minimize the technical risks. At the same time, other chains are seeing hundreds of millions, if not billions, poured into innovating its underlying technology.
While both strategies have their place in the market, the question is, which one proves to capture a more significant market share?
If a flippening occurs, I think we should see it in the next five years.
Special thanks to antiprosynthesis (@antiprosynth) for reviewing this blog post.