The Flippening and What is Money?

Hey hey Steemit Community!

As you may or may now know – depends on how much you keep up with -

Both bitcoin and ether prices fell today, putting off what many traders consider inevitable—the “Flippening”.

The Flippening, of course, refers to the potential future date when Bitcoin could lose its status as the largest cryptocurrency by market cap.

Many coins have tried to usurp Bitcoin through technical innovations, corporate partnerships, and marketing strategies, but Bitcoin still runs the show.

Only recently has the Flippening become a real possibility. As the ether price has surged to a high of more than $400, Ethereum has become the first cryptocurrency to get within striking distance of Bitcoin’s market cap.

Will the Ethereum platform finally take the blockchain mainstream? Will Bitcoin give way to new successors?

Gyft co-founder and Civic CEO Vinny Lingham, believes that Altcoins such as Etherium will die out soon enough, as he stated on Twitter:

¨Bitcoin is better money, deflationary & scarce. Ether is not really money, inflationary & abundant. The flippening makes no sense¨

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What Lingham’s tweet means is that, strictly speaking, Bitcoin and Ethereum are not competitors.

Bitcoin is designed to function as a currency (which is why Bitcoin nodes validate addresses), while ether is meant to serve as fuel for Ethereum’s decentralized smart contracts platform!

This is why the developers of Ethereum refer to ether as a “token” and advise it is not intended to be used as a currency.

However, that warning has not stopped people from treating ether like a currency – like we have seen in the past few weeks!

Lingham states that Bitcoin derives its value from its scarce and deflationary nature.

Ether, in contrast, is inflationary ,Ether issuance is capped at 18 million per year (the move to Casper should decrease that number further), so the rate of inflation will decrease every year, but the token will still remain inflationary .

Ether’s inflationary nature has proved unpopular with some Bitcoin proponents, many of whom were first attracted to cryptocurrency because of Bitcoin’s “digital gold” nickname.

On Thursday last week, we had these almost – flippening numbers!

Additionally, as Lingham points out, there are already far more ether in circulation than bitcoins (~92.5 million ETH to ~16.4 million BTC).

But really... What is Money?

Lingham’s tweet triggered a LOT of replies (more than 100).

Lightning co-founder Elizabeth Stark described the Flippening as short-term ether speculation.

She stated that “Users and real use cases are what will matter,” not short-term market cap rankings.

Before long, this thread had sunk into arguments about the fundamental nature of money.

BitPoint CEO Aaron Foster, for instance, argued that Ethereum will surpass Bitcoin’s market cap and that to deny that ether is money is “stupid,”.

“What is money?,” he asked. Olivier Janssens rejected the assertion that Ethereum cannot serve as a store of value.

Others compared ether to the U.S dollar (both favorably and unfavorably) and pushed back against Lingham’s assertion that deflation is a positive attribute for a currency to have – I wish ethereum keeps inflating for us miners!

In any case, either the Flippening happens or it doesn’t, but one old-as-time question still comes to mind...

“What is money?”