Poised to overtake bitcoin this year, Ethereum is changing the way we think about cryptocurrency

Alex Tapscott is chief executive of NextBlock Global

Bitcoin is the mother of all cryptocurrencies, and the most famous of them. Created by a person or people using the pseudonym Satoshi Nakamoto, it defined the algorithms that enable the transfer of assets from one party to another without an intermediary, such as a bank.

This helped to kickstart what we call the blockchain revolution. Yet despite its staggering growth – up 500 per cent in the past five years alone – bitcoin is likely to be eclipsed by an upstart called Ethereum that was developed by a twentysomething Torontonian.

Ethereum's cryptocurrency has a name – ether – that most people have never heard of, outside of a chemistry lab. The total market value of all ether in circulation is $25-billion, not too far below bitcoin's $42-billion. Ethereum now has "the flippening" in sight, that moment in time when its value surpasses bitcoin's, something unthinkable only a few months ago.

Is ether simply riding the bitcoin wave of popularity as speculators flood the market for cryptocurrencies? After all, bitcoin's value has soared from $963 at the beginning of the year to $2,550 today, blowing past my own 2017 price prediction of $2,000.

Perhaps the culprit is Russian President Vladimir Putin, who some believe is buying up ether for himself or even building a digital ruble on top of Ethereum. These rumours started after Mr. Putin met with Ethereum's founder, Russian-Canadian Vitalik Buterin, at the International Economic Forum in St. Petersburg last month. Though the meeting may have piqued Mr. Putin's interest – and the opportunities for blockchain and central banking are indeed profound – the headlines in Vanity Fair, Bloomberg, and others about his master plan are probably overstated.

Something more fundamental is going on here.

Ether's value will surpa...