Sign in if you're already registered.BlockchainSpeculators Are Driving a Cryptocoin BubbleRobert HackettI barely made it past the turnstiles at last week's NYU Token Summit, a day devoted to those weird new digital assets that are all the rage in financial tech right now.(I know; I’ve been covering a number of similarly themed events lately.)It struck me, as I watched dozens of ticket holders get turned away from the oversubscribed event, that there was perhaps no better symbol of the speculative mania we've been witnessing in recent weeks than the sight of 70 would-be attendees sadly zip up their rain jackets, reverse course, and trudge home from an event that, not so long ago, would have been attended by few people.(William Mougayar, the summit’s organizer and a partner at the Toronto-based investment firm Virtual Capital Ventures, told me he would be forced to refund around $20,000.)In case you're just tuning in, tokens are a kind of digital currency built on blockchains, the innovative accounting technology that first made Bitcoin possible.

Nowadays, most tokens are minted on Ethereum, a rival network that aims to create a virtual computer distributed across a swarm of volunteer machines.Lately entrepreneurs have been using Ethereum to coin their own digital currencies and sell them directly to the public.So far the tactic has been working: The market capitalization for all cryptocurrencies exceeds $90 billion today.Bitcoin accounts for less than half of that sum.Get Data Sheet, Fortune’s tech newsletter, from which this essay originated.Depending on your perspective, tokens either herald the next wave of the Internet, or conceal a scam-riddled tulip garden.Advocates like Chris Dixon, the investor at Andreessen Horowitz, have described the technology behind tokens as "a breakthrough in open network design."Critics, like Izabella Kaminska, a writer at the Financial Times, have disparaged it as a "Ponzi machine."Probably both are right.One thing both sides can agree on: We're in the midst of a cryptobubble.Speculation, not utility, is driving an outrageous purchasing frenzy.

This was made clear when Mougayar, one of the Token Summit's hosts, polled the crowd on how many people own tokens.Essentially everyone—more than 500 people—raised a hand.How many people actually use them for something other than trading?About 10 hands went up.Nevertheless, the most ardent believers take a longer term view.As Olaf Carlson-Wee, founder of the hedge fund Polychain Capital and a bull in the market, told me during a cocktail hour after the event, "It's only a bubble if it crashes."Bitcoin has more than doubled in price this year alone, but it has been outperformed by its closest rival Ether, which is up over 2,300 percent.On January 1, bitcoin was trading at the day's high of $1,003.25.On Wednesday, it broke through the $2,300 barrier for the first time to hit a fresh record high of $2,377.32, according to CoinDesk, marking a year-to-date rise of 137 percent.To find out what's driving bitcoin's rally, read more here.Meanwhile, bullishness around bitcoin has stoked appetite for other cryptocurrencies.

One in particular known as ether is getting traction.This represents a 2,367 percent rise year-to-date.Ether runs on an underlying technology called Ethereum, which is a different blockchain to the one that underpins bitcoin.While ether does have digital "coins" like bitcoin, companies are more focused on how the Ethereum blockchain could be used in real-world applications.Ethereum has been designed to support so-called smart contract applications.A smart contract is a computer program that can automatically execute the terms of a contract when certain conditions are met, potentially taking a lot of the human involvement out of completing a deal.ethereum loansBarclays for example, have used a form of this technology to trade derivatives.bitcoin ataque 51How is it different to bitcoin?ethereum hive

Firstly, Ethereum is a lot younger having only been started in 2014, whereas bitcoin began in 2009.Ethereum is also focused on smart contracts, while bitcoin is very much about payment technology.Why has ether rallied so much?While bitcoin has been getting support from certain governments and investors, the Ethereum blockchain has been backed by corporates wishing to use the technology for smart contract applications.A group called the Enterprise Ethereum Alliance (EEA) was recently founded to connect large companies to technology vendors in order to work on projects using the blockchain.ethereal projection guideCompanies involved in the launch include JPMorgan, Microsoft and Intel.cena bitcoin 2011On Tuesday, the EEA announced another 86 firms joined the alliance, which is adding growing legitimacy to the cryptocurrency.bitcoin billionaire island

At the same time, the rally in bitcoin has seen investors turn to alternative digital currencies as well as attracting a broader investment base.A year ago, over 83 percent of ether buying happened with bitcoin, according to data from CryptoCompare, showing that it was mainly crytocurrency enthusiasts interested in it.As of Wednesday, bitcoin accounted for just over 32 percent of trade while fiat currencies such as the U.S.dollar and Korean won have risen sharply."Yes the direct fiat flow options are a fleshing out of the ethereum ecosystem and show its broad appeal," Charles Hayter, CEO of CryptoCompare, told CNBC by email.sell bitcoin sepaWill the rally last?triple coin bitcoinNot all in the market are convinced that the ether rally will last.ethereum coin mining rig