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GUANGZHOU, China – Ether, the digital coin connected to the Ethereum blockchain, hit an all-time high of $ 3,456.57 as the cryptocurrency extended a rally, the price of which rose 360% this year.
The digital coin, which reduced some of those gains in Tuesday afternoon trading in Asia, traded at $ 3,271.90 at 12:12 p.m., according to CoinDesk data.
Interest in cryptocurrencies has increased dramatically over the past year, and Bitcoin has continuously hit new record highs. A number of factors, including rising institutional interest and large corporations like Tesla buying the digital coin, have been blamed for its surge.
In times of geopolitical turbulence or volatility in the financial markets, Bitcoin was described as “digital gold” or a store of value and as a hedge against inflation.
But Ethereum is different. It acts more as a platform on which developers can build apps. Ethereum is the name of the network, or underlying blockchain technology, while Ether is the digital currency that the platform is operated in.
So-called smart contracts are an essential feature of Ethereum. These are contracts that can be executed automatically with code.
The use of Ethereum in so-called DeFi applications (decentralized finance) is becoming more and more exciting. These are blockchain-based financial services like loans that banks and brokers could theoretically bypass.
Last month, the European Investment Bank announced that it had issued Ethereum, its first digital bond on a public blockchain.
An increasing number of DeFi applications based on Ethereum and growing institutional interest in the technology could be responsible for the rapid rise in prices.
“Thousands of developers create applications that replicate traditional financial products in a decentralized way on Ethereum. As more and more users start interacting with these apps, they need ETH (Ether) to conduct transactions,” said Sergey Nazarov, co-founder of the intelligent Contractor Chainlink said.
“Second, institutional interest in the public Ethereum blockchain seems to be growing as stakeholders play around with ways to use the public network.”