While the world marvels at the seemingly unstoppable growth of digital cryptocurrency Bitcoin, its closest rival, Ethereum, has enjoyed an even more unbelievable rise in 2017.
Spurred on in part by investors’ unshakeable belief in Bitcoin, Ethereum – which currently ranks as the world’s second largest cryptocurrency in terms of market value – has actually outperformed Bitcoin in growth in 2017, this week reaching an incredible 2,367 percent gain in value since the beginning of the year, before dropping slightly.
Unlike Bitcoin, which operates on a different kind of blockchain software, and is mainly used as a payment technology, Ethereum works by performing what are called “smart contracts” – apps that execute contracts based on certain conditions being met.
The broad flexibility of the concept – which enables app developers to build all kinds of decentralised apps on the platform – means the Ethereum blockchain could ultimately prove incredibly disruptive to the way data is handled on the internet.
But despite how that sounds, the disruptive prospects haven’t scared big business away from Ethereum.
One of the reasons the platform has attracted so much interest lately is because major companies keep signing up to the Enterprise Ethereum Alliance, an organisation seeking to support and develop the smart contracts software.
Outfits like Microsoft and Intel were launch members of the Alliance, but the list keeps getting bigger, with 86 companies – including Samsung and Merck – joining just this week.
While there’s definitely a huge amount of interest in Ethereum and ether’s amazing growth recently, there are also concerns that the party won’t last, with commentators pointing out that cloning of the concept could devalue the ether currency itself.
“People are buying a specific blockchain, but the big interests are in the technology,” Bitcoin trader Jason Hamilton told CNBC.
“They’ll probably make their own clones and the ether tokens everyone is buying won’t be used for much except trading… I don’t usually trade ether. I’m afraid of that bubble bursting, but it could go on bubbling up for a long time still.”
It’s perhaps unlikely those concerns will be enough to stop Ethereum’s recent swelling any time soon though, as the undying growth of Bitcoin just goes to show that the world is mad for cryptocurrencies.
Less than five months ago, we reported on how Bitcoin’s super-strong end to 2016 saw it stand out as last year’s best-performing currency of 2016, at a point in time when it was approaching its all-time high of $1,163.
And so far this year, Bitcoin has surpassed almost everybody’s expectations, hitting a new record peak of $2,791.70 before paring back.
Clearly there’s an awful lot of volatility in these markets, so despite predictions that cryptocurrencies like Bitcoin could rise as high as US$1 million in 5–10 years, the truth is, nobody can really tell for sure which way this is all going to shake out.
“It feels like 1999 right now,” managing partner of Blockchain Capital, Brock Pierce, told CNBC.
“We may end up having a similar outcome. We could see a big correction here.”