Even as the arguable star of 2017 Bitcoin stalls thousands below its all-time high, the third largest cryptocurrency by market value, Ethereum, is soaring to new records Thursday.
For the first time ever, Ethereum prices rose above $1,000 per unit in early trading Thursday, as investors look increasingly toward alternative currencies such as Ethereum, Ripple, and Litecoin.
It’s hard to say for certain what is causing the 8% pop in Ethereum prices. Though in recent weeks, investors have helped push up the price of another rival cryptocurrency, Ripple, in part because more and more major banks and institutions agreed to partner up with the folks behind the digital asset in a bid to speed up transactions, and growing investor interest.
Similarly, banking giants have also increasingly looked to Ethereum for another set of solutions. In mid-December, a group of financial companies including UBS, Credit Suisse, and Barclays announced plans to test the Ethereum blockchain in the hopes of making it easier to meet new European Union reporting standards under the Markets in Financial Instruments Directive II.
The banking group will be able to anonymously submit information to the private blockchain, and cross-check for any irregularities.
Those partnerships get to the heart of a major argument as to why Ethereum proponents consider their cryptocurrency to be more flexible and, in a sense, more useful than Bitcoin. While Bitcoin is one way to use blockchain, the technology underlying digital currencies that records transactions, Ethereum allows developers to build on the blockchain platform. That’s also why initial coin offerings have largely been built on the Ethereum platform.
“Bitcoin is the first application built on the blockchain technology,” said Ethereum co-founder Joseph Lubin to Bloomberg in December. “Ether can be a more programmable money. We conceive it as a crypto fuel because it powers these programs on the world computer.”
Also fueling that narrative: bank executives such as J.P.Morgan’s Jamie Dimon, who have called cryptocurrencies such as Bitcoin a “fraud”—yet noted that the underlying technology, the blockchain, does not fall in the same category. J.P.Morgan is also building a blockchain atop the software running Ethereum.
Ripple, however, has overshadowed Ethereum’s recent rise, with the former cryptocurrency now ranking as the second largest by market capitalization, according to CoinMarketCap—outranking Ethereum’s $100 billion value by nearly $40 billion.
Despite its rocky end to 2017, though, Bitcoin still ranks top-of-the-list in terms of market cap, $251 billion with its price at $14,970. That’s down 25% since the its all-time high price of above $20,000.
Ripple CEO Brad Garlinghouse has argued that it’s not a zero sum game, and there is space for all three major cryptocurrencies.
“In 2017, people have realized there isn’t going to be one crypto to rule them all,” in October. “You’re seeing vertical solutions where [Ripple] is focused on payment problems, Ethereum is focused on smart contacts, and increasingly Bitcoin is a store of value. Those aren’t competitive. In fact, I want Bitcoin and Ethereum to be successful.”