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.

Barclays for example, have used a form of this technology to trade derivatives.How is it different to bitcoin?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.Companies involved in the launch include JPMorgan, Microsoft and Intel.On Tuesday, the EEA announced another 86 firms joined the alliance, which is adding growing legitimacy to the cryptocurrency.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.dogecoin securityAs of Wednesday, bitcoin accounted for just over 32 percent of trade while fiat currencies such as the U.S.kiem bitcoin bang androiddollar and Korean won have risen sharply.bitcoin vancouver bc"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.Will the rally last?Not all in the market are convinced that the ether rally will last.Bitcoin trader Jason Hamilton is worried that products like Ethereum could be cloned."People are buying a specific blockchain, but the big interests are in the technology.

They'll probably make their own clones and the ether tokens everyone is buying won't be used for much except trading.Who knows, though," Hamilton told CNBC via a direct message on Twitter."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."The combined market capitalization of all public cryptocurrencies has surged nearly 80% over the last month, as more than $20bn worth of new investment dollars has flooded the nascent market.In roughly 30 days alone, the market cap for experimental blockchain-based cryptographic assets has ballooned from $27.8bn to $49.5bn, according to data from CoinMarketCap, with the strongest gains observed outside of the market's historical leader, bitcoin.A closer look reveals the total market cap of so-called 'altcoins', cryptographic tokens that seek to serve alternative use cases to bitcoin, has surged to $23.5bn, up more than 600% from just over $3bn in early March.Amid this sharp rally, some market observers have expressed concerns that the asset class may have entered a speculative bubble.

When supporting his argument, Jacob Eliosoff, a trader who runs a cryptocurrency fund, pointed to not only to the price gains, but also the fact that so many cryptocurrencies – including those that haven't seen technical or business progress – have risen in value."I've been making the bubble argument for weeks.Doge, Dash, Litecoin, Stellar, Gnosis ... practically every coin has surged."He further cautioned that this development is "a sign of unthinking buyers that will sell as soon as the tide turns."Daniel Masters, director of the regulated investment vehicle Global Advisors Bitcoin Investment Fund (GABI), offered similar sentiment, emphasizing that even cryptocurrencies with smaller market caps – like litecoin, ether, namecoin and ripple – have all experienced strong gains over the last few months.He told CoinDesk that he believes "sentiment [is] too strong," noting that between this and record prices for cryptocurrencies, a bubble may be forming.While the aforementioned analysts provided cautious viewpoints, other market observers were more optimistic, asserting that cryptocurrency prices have significant room to appreciate despite current prices.

Harry Yeh, managing partner of Binary Financial, took a bullish slant, telling CoinDesk that "there's still quite a ways to move" as more investors take note of big gains in the sector.Tim Enneking, chairman of Crypto Currency Fund, also spoke to the market's potential."I would agree that prices have increased too far too fast, but I don't think it's a serious problem – more like a buying opportunity," he said.He elaborated on this statement, pointing out that it is challenging to determine the "true value" of a cryptocurrency: "I'm not sure I would label it a bubble, at least not yet.It's quite difficult to definitively state what the intrinsic value is or should be of an altcoin," he said, adding: "Property is worth what people are willing to pay for it."One strong indicator of the bullish sentiment is robust trading.While transaction volume for many of the digital assets listed on Coinmarketcap has risen, over-the-counter (OTC) trading firms have also reported an increase in activity.

Martin Garcia, vice president of Genesis Global Trading, noted that his New York-based firm is experiencing such an improvement."Our new applications are up significantly, and old clients are circling back as well," Garcia said.Ryan Rabaglia, head trader for Octagon Strategy, expressed similar sentiment."Our desk has had [a threefold] volume increase over the last few months and over the last few weeks we're onboarding new counterparties at a record rate," he said.Finally, Rabaglia spoke to the changing demands of his customers, emphasizing that while bitcoin and ether are still the "hottest names," his trading desk has repeatedly received requests for trades involving lesser-known alternative cryptocurrencies such as ZEC, DASH, ETC and XRP.Ultimately, he characterized the current market as one with abundant opportunities for his business."Up to this point we've dabbled in each and are considering dedicating more resources if the demand persists."Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Genesis Global Trading.