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GUANGZHOU, China – Ether, the digital currency linked to the Ethereum blockchain, peaked at $ 3,456.57 as the cryptocurrency expanded a rally that has seen its price rise around 360% this year.
The digital currency paired some of these gains in trading Tuesday afternoon in Asia trading at $ 3,271
Interest in cryptocurrencies has increased over the past year with bitcoin continually pushing new record highs. A number of factors, including rising institutional interest, and large corporations like Tesla buying the digital currency are credited with its rise.
Bitcoin has been described as “digital gold” or a store of value in times of geopolitical turmoil or volatility in the financial market as well as a hedge against inflation.
But Ethereum is different. It works more like 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 used to power the platform.
So-called smart contracts are a key feature of Ethereum. These are contracts that can be executed automatically using code.
There is growing excitement about the use of Ethereum in so-called decentralized financing or DeFi applications. These are blockchain-based financial services, such as lending, which in theory can bypass banks and brokerage firms.
Last month, the European Investment Bank said it issued its first ever digital bond on a public blockchain using Ethereum.
An increasing number of DeFi applications built on Ethereum and growing institutional interest in the technology may be behind the rapid rise in prices.
“Thousands of developers are building applications that recreate traditional financial products in decentralized ways on top of Ethereum, and as more and more users flock to interact with these apps, they require ETH (ether) to complete every transaction,” Sergey Nazarov , co-founder of smart contract firm Chainlink, said.
“Second, there seems to be increasing institutional interest in the public Ethereum blockchain as stakeholders play around with ways to exploit the public network.”