Demand for NFTs and DeFi apps is surging, allowing Ethereum supporters to drown out the clamour of Bitcoin maximalists who have long asserted that only the original cryptocurrency matters. In August, Ether, the most extensively used blockchain's native token, surged by 36%, more than twice the 13% gain for holders of the largest digital asset by market value over the same period. Ether has outperformed Bitcoin so far this year by the largest margin since at least 2018, according to Bloomberg data.

The Ethereum "community has picked up that mantle to a much louder degree, and that kind of blockchain development is actually enjoying a bullish moment in crypto right now," said FRNT Financial's chief executive and co-founder, Stephane Ouellette.

Following a major software upgrade to the Ethereum network in August, many commentators predicted that Ether would rise. The upgrade, code-named London, slows the rate at which Ether tokens are created.

Many investors suggested that reducing the coin's supply would result in higher prices due to increased scarcity prior to the upgrade. Others speculated that the supply could fall much more after Ethereum switches to a new mechanism for confirming transactions, which could happen as early as the first quarter of next year. In most circumstances, this new verification approach will stake Ether tokens using computers that support the Ethereum network rather than miners.

"For quite some time, the innovation at work in the smart-contract space had been defying maximalist slogans," said Mati Greenspan, the founder and CEO of Quantum Economics. Still, because many of the breakthroughs are so new — particularly in DeFi and NFTs — it's difficult to predict how much further growth will occur or what other new sectors will emerge, he said.

Since the development of the alternative blockchain, the case for Ether to exceed Bitcoin has been a recurrent subject in crypto. Bitcoin maximalists argue that the original cryptocurrency is still the purest form of digital money, pointing out that its market value is around $900 billion, or more than double that of Ether.

Ether saw its second monthly gain in a row in August, and its greatest monthly performance since April. Compared to Bitcoin's 60% rise this year, the coin has gained more than 350%. It increased by approximately 5% to $3,558 on Wednesday, while Bitcoin increased by roughly 1% to $47,400.

"Ethereum is considered as a stronger store of value," said Matt Maley, chief market strategist for Miller Tabak & Co. "That's why it's been chosen by institutions for a long time." "It is currently the preferred option for all investors."

And it isn't just Ether who has recently been in the spotlight, according to Ouellette. Both Solana and Cardano exemplify projects with a similar purpose, and both have made significant progress.

There is little agreement among analysts and investors as to what is driving sections of the demand for smaller or alternative coins. Some speculate that after huge runs, speculators are shifting away from the stalwarts and into fresh, more intriguing offshoots. Others picture a world saturated in cash and ultra-low rates, pushing investors toward increasingly bizarre products.

Ethereum is the fabric of the tokenized economy, according to Wilfred Daye, chief executive officer of Enigma Securities, and it has a deeply rooted and solidified programmer community. "ETH has higher volatility than Bitcoin and a similar liquidity profile to Bitcoin," he noted from a trading standpoint. "In the long run, ETH has a real potential of outperforming," says the author.