Will Binance Coin Flip Ethereum?

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  • Binance Coin has roared to third place by market cap
  • Many have claimed that it will overtake Ethereum into second
  • What are the factors behind the battle for second place?

There have been many supposed ‘Ethereum killers’ since 2017, but none of them has ever amounted to much. However, in Binance Smart Chain, Ethereum may have met its match. The platform, which is based on the Ethereum DEX model but with a centralized core, has taken the crypto world by storm with its fast and cheap transactions with no loss in other functionality, to the point where Binance Coin has shot to third place by market cap, one below Ethereum. Are we finally witnessing a genuine threat to Ethereum’s second place, which it has held since late 2015, or is this latest new kid on the block going to stop short of this monumental target?

Math Suggests the Flippening Could Happen

From a purely mathematical perspective, it is certainly plausible for Binance Coin to flip Ethereum. The Ethereum market cap currently sits at some $250 billion, while Binance Coin is a place behind it with a market cap of $91 billion, largely thanks to an astonishing 70% rise in the past. This means that Binance Coin needs to outpace the growth in Ethereum’s price by a factor of some 2.75 to have a hope of flipping it.

On the face of it, given that Binance Coin has recently soared to $640, such a valuation is not out of the question. It’s fair to say that as a platform Binance Smart Chain has more room to grow than Ethereum given where the two are in their respective life cycles, and an outpacing of this magnitude is plausible in the current conditions.

Use Case Favors Ethereum

In terms of use case and adoption, Ethereum can play the trump card here. It is currently the home of the DeFi movement and remains the go-to platform for a huge number of new projects. The likes of Polkadot and Binance Smart Chain have taken some of the competition away from Ethereum, but if the DeFi movement continues to use Ethereum as its base then Binance Coin doesn’t stand much of a chance at flipping it. The only hope Binance Coin has is if it becomes the home of an equally transformative movement. Never say never.

Technology Too Tight to Call

This battle is very much on a knife edge. Ethereum is the home of the DeFi movement because it is a decentralized ecosystem, but with that comes the age-old problems of slow, expensive, and potentially lost transactions. The upgrade to Ethereum 2.0 promises to address these issues, as well as a potentially deflationary model thanks to Ethereum EIP 1559, but any delays could be fatal.

Binance Smart Chain on the other hand is faster and much, much cheaper than Ethereum, but is a centralized entity – hence why not many DeFi projects are keen to move over to it. Their hand may be forced however if Ethereum 2.0 faces any significant delays, with some projects already switching blockchains as a result of Ethereum’s transaction issues.

Etheruem’s Fate in its Own Hands

In many ways, the Binance Coin vs Ethereum battle comes down to whether Ethereum can scale. It has everything in its favor – huge popularity, decentralization, first mover advantage, and the DeFi movement to name but a few – but if Ethereum 2.0 is delayed or doesn’t bring the changes it is promising, then we could see projects sacrificing the principle of decentralization for a platform that just works.

Equally, if Binance Smart Chain can become the home of a movement that is equal in potential to that of DeFi, then there is a good chance that a Binance Coin/Ethereum flippening may be on the cards.