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GUANGZHOU, China – Ether, the digital coin linked to the Ethereum blockchain, reached a record high of $ 3,456.57 as the cryptocurrency expanded the rally, with its price rising by about 360% this year.
The digital coin cut some of those gains on Tuesday afternoon trading in Asia traded at $ 3,271
Interest in cryptocurrencies has grown over the past year, with bitcoin constantly pushing new record highs. A number of factors, including growing institutional interest and large companies such as Tesla that buy the digital coin, have been credited with its rise.
Bitcoin has been described as “digital gold” or a stock of value during geopolitical turmoil or financial market instability, as well as hedging against inflation.
But Ethereum is different. It acts more as a platform on which developers can build applications. Ethereum is the name of the network or the main 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 a code.
There is growing excitement about using Ethereum in so-called decentralized funding applications or DeFi. These are blockchain-based financial services, such as lending, that could theoretically bypass banks and brokerage firms.
Last month, the European Investment Bank said it had issued its first public blockchain digital bond using Ethereum.
The growing number of DeFi applications based on Ethereum and the 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 a decentralized way on top of Ethereum, and as more and more users flock in to interact with these applications, they require ETH (Ether) to complete each transaction.” Sergei Nazarov, co-founder of the smart contracts company Chainlink, said.
“Second, institutional interest in Ethereum’s public blockchain seems to be growing, as stakeholders are toying with ways to engage the public network.”