By Yasin Ebrahim
Investing.com – Ether is up more than four-fold since the start of the year, and it won't be long before it usurps bitcoin as the most valuable cryptocurrency in a "flippening" event that some say could come as soon as the end of the year, or early 2022.
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ETH/USD rose 13% to $4,063.2, adding to gains of about 450% for 2021 so far. With a market cap of $463 billion, ETH needs to double in price to flip BTC, which has a current market cap of $923 billion.
"I would not be surprised if the flipping didn't potentially happen in the late 2021, or early 2022," Seamus Donoghue, vice president strategic alliances at Metaco, said in an interview with Investing.com on Friday.
"The investment thesis around bitcoin as 'gold 2.0' or a store of wealth is interesting, but it is a $10 to $12 trillion opportunity," Donoghue added. "A potentially much bigger opportunity is the reinvention of capital markets […] and that's a bit more about smart contracts, and Ethereum has been a dominant protocol in that space."
The talk of flippening isn't new. In the previous crypto bull run, ether had its sights on the number one spot, though ultimately – together with BTC - withered away as a bloody crypto winter set in and wiped off billions from the overall cryptocurrency market.
But promising signs, though very nascent, that Ethereum, the network behind ether or ETH, will play a big role in tokenizing capital market assets -- converting assets into a token that can moved and stored onto the blockchain -- has some talking up the prospect of a flippening in the months ahead.
Ethereum's reputation as the future platform that could form the building blocks of this new economy has been growing.
In April, the European Investment Bank raised €100 million by selling a two-year digital bond using Ethereum's blockchain technology.
"This was notable not because it's the first tokenization, but it's the first by a triple A name, Donoghue said. "It [offers] a hint of what the future is and this could operate at scale, with much lower costs, less intermediation, and more transparency, enabling issuers to be much more responsive to [changing] market conditions, which is a game changer."
But the journey to potentially reinvent capital markets - by converting and moving them onto the blockchain - still has a long way to go. There are a myriad of frictions or kinks on Ethereum's platform or network that need to be worked out.
"One of the problems with moving markets to a tokenized format is creating secondary market liquidity for tokenized assets. "But if that can be resolved possibly in the next year and a half, we could see a rush of assets being tokenized," according to Donoghue.
Other teething problems on Ethereum including speed and efficiency woes, high transaction, or "gas" fees that are stifling scalability will also need to be address. That is widely expected to be solved in an upcoming upgrade to Ethereum 2.0.
It is still uncertain as to when the upgrade to Ethereum 2.0 will be completed, with some touting early 2022 as a potential timeline, but it could be the game changer that helps ETH usurp bitcoin.
"I think that's the catalyst for that [flippening]," Donoghue said. "If we get to the point where people think it [the upgrade] will happen, then that'll be a significant catalyst. It's not far out to a flipping event, [requiring] only about a doubling of ETH's price."
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