Ethereum is well known in the world of cryptocurrencies but does not have Bitcoin status among mainstream investors.

In terms of market value, it is the second most important after Bitcoin at £ 145 billion compared to £ 750 billion for Bitcoin, but its price has risen even faster this year, up 145 percentage points versus 97 percentage points for Bitcoin.

An Ethereum token is now priced at $ 1,770 (£ 1,270), not far from its all-time high of $ 2,000. But what exactly is it, will the price continue to rise and should investors buy some?

What is it?

Ethereum is a cryptocurrency like Bitcoin that runs on its own “blockchain”, an online ledger that tracks the transmission of information.

It was created in 2013 by Vitalik Buterin, a developer who was only 19 years old at the time. His vision was a decentralized payment network with its own cryptographic currency that would allow anonymous payments to be sent over the internet without the need for a bank or other third party.

As the second largest cryptocurrency after Bitcoin, Ethereum has inevitably made comparisons. Its rapid rise has also led to allegations of a bubble. However, proponents say that Ethereum has several advantages over Bitcoin that make it more useful.

The first is that Ethereum allows “blocks”, the records of cryptocurrency transactions, which can be created much faster than Bitcoin. While Bitcoin has been widely adopted by online merchants and even some physical stores, Ethereum fans believe that its efficiency makes it better for transactions than storing value.

However, the main advantage of Ethereum is that the technology allows third-party applications, rather than just currency, to run on the network. The attraction of Bitcoin lies in money that is not controlled by any party and does not have to go through a central server, but Ethereum not only lets money run on the network, but all sorts of other things.

Storing files on a cloud storage service like Dropbox means the user trusts Dropbox to take care of it. In a decentralized storage network, however, they trust other users who have an interest in their maintenance.

A number of apps are built on top of Ethereum, and the network is also used by startups to raise funds with initial coin offerings that exchange Ethereum or other currencies for special “tokens” that give access to a service.