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Ethereum hits new record high above $3,400, extending its more than 300% rally this year.

Ether, the digital coin connected to the Ethereum blockchain, reached an all-time high of $3,469.57, extending a year-long rally that has seen the cryptocurrency's price rise over 350 percent.

According to CoinDesk reports, the digital coin pared some of its gains in Tuesday morning trade in London, and was trading at $3,379.78 at 11:20 a.m.

The popularity of cryptocurrencies has exploded in the last year, with bitcoin setting new records on a regular basis. The growth of the digital coin has been attributed to a variety of factors, including increased institutional interest and the purchase of the digital coin by major corporations such as Tesla.

Bitcoin has been dubbed "digital gold," a store of value that can be used as a shield against inflation during periods of geopolitical unrest or financial market instability.

Ethereum, on the other hand, is not like that. It's more of a platform for developers to build apps on. Ethereum is the network or underlying blockchain technology, and ether is the digital currency used to power the platform.

Ethereum's so-called smart contracts are a key feature. These are contracts that can be performed automatically with the help of software.

The use of Ethereum in so-called decentralised finance, or DeFi, applications is gaining popularity. There are financial services built on the blockchain, such as lending, that could theoretically circumvent banks and brokerages.

The European Investment Bank announced last month that it had launched the world's first digital bond on a public blockchain using Ethereum.

The rapid price rise may be due to an increase in the number of DeFi applications developed on Ethereum, as well as increasing institutional interest in the technology.

“Thousands of developers are building decentralised apps on top of Ethereum that mimic traditional financial products, and as more users interact with these apps, they'll want ETH to complete any transaction,” Sergey Nazarov, co-founder of smart contract firm Chainlink, said.

“Second, institutional interest in the decentralised Ethereum blockchain is growing as users experiment with new applications.”

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