Ethereum surges 60% to all-time high as cryptocurrency closes in on bitcoin

Smaller cryptocurrencies have risen as speculators have moved money away from bitcoin in the hope of similarly astronomical returns

Ether’s ascent has come despite concerns being raised about the technology behind the ethereum network (Getty Images)

The most valuable cryptocurrency apart from bitcoin, known as ether, hit a new record-high price of $1,417 on Wednesday after rising more than 60 per cent in a week.

The digital coin, based on the ethereum blockchain, fell back slightly from that high to trade at $1,358 by 2pm in London, according to CoinMarketCap, a website that tracks cryptocurrency prices. It means the total value of ether in circulation stands at just under $132bn, behind bitcoin’s market capitalisation of $240bn.

Another cryptocurrency, Ripple’s XRP, briefly deposed ether from second place in the list after a surge in price last week, but it has since fallen sharply.

Smaller cryptocurrencies have risen as speculators have moved money away from bitcoin in the hope of similarly astronomical returns. Investors who invested money in bitcoin at the start of 2017 saw 15-fold returns by the end of the year.

Ether’s ascent has come despite concerns being raised about the technology behind the ethereum network. The cryptocurrency was removed from Bittrex, a major coin exchange, over the weekend after a glitch caused transaction costs to spike.

While bitcoin uses blockchain technology for one application - to transfer online payments directly between users - ethereum has a wider range of potential uses.

Most notably ethereum can process “smart contracts” - meaning it can store code that details the rules for negotiating a deal, then verify those terms and automatically execute the contract once the conditions have been fulfilled.

Smart contracts can be utilised for a number of functions such as “multi-signature” accounts, which ensure that funds are spent only when a required percentage of people agree, or managing an insurance agreement so that it becomes active from the moment certain documents have been filed.

Such applications of blockchains have the potential to dramatically reduce the time spent on administering a broad range of contracts.

On Wednesday, ether joined bitcoin in being demanded by cybercriminals as a method of payment to stop a ransomware attack.

A new variant of the HC7 ransomware, which hijacks victims’ computers or networks and blocks access to them until a payment is made, is thought to be the first such virus to demand ether.