XRP (XRP 4.19%) and Cardano (ADA -1.74%) are both volatile cryptocurrencies. XRP, the native token of the Ripple payment network, started trading at $0.0058893 in 2013, soared to its all-time high of $3.84 in 2018, but now trades at $0.59. Cardano, the native token of a third-generation blockchain, started trading at $0.025 in 2017, set a record high of $3.09 in 2021, and now trades at about $0.44.
So if you had invested $100 in XRP, your investment would have briefly blossomed to more than $65,200 before shrinking back to about $10,000. That same $100 investment in Cardano would have grown to nearly $12,400 before dropping back to $1,800 today. Should investors still buy either of these meme coins in this choppy market?
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XRP investors are looking forward to one major catalyst
XRP is tethered to the Ripple payment network, but the token doesn’t get nearly as much attention as its underlying platform. Ripple’s network uses a blockchain-based ledger to process real-time gross payments, cross-border transfers, and currency exchange transactions. It claims its approach provides its customers with secure, instant, and “nearly free global financial transactions of any size with no chargebacks.”
Several smaller financial institutions — including Travelex Bank, Tranglo, and Sentbe — have already adopted Ripple as a cheaper alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) protocol used by most banks. However, all of those clients use Ripple’s XCurrent network, which allows them to make those transactions in common fiat currencies instead of using XRP as a bridge currency.
As a result, Ripple’s expansion didn’t turn XRP into a widely accepted cryptocurrency. Some critics even argue that XRP isn’t a “real” cryptocurrency because it wasn’t created with the proof-of-work (PoW) or proof-of-stake (PoS) protocols. Instead, Ripple created its entire supply of 100 billion XRP tokens prior to its market debut, locked up 55 billion of those tokens in escrow accounts on its blockchain in 2017, and periodically releases some of those tokens to stabilize its liquidity.
XRP isn’t as appealing as Bitcoin (CRYPTO: BTC), which is mined with the PoW method as an asset, and its blockchain doesn’t natively support the development of decentralized apps (dApps) like Ethereum (CRYPTO: ETH) and other PoS blockchains. Its price has also been weighed down by an ongoing lawsuit from the U.S. Securities and Exchange (SEC), which alleges that Ripple’s offerings of $1.3 billion in XRP tokens over the course of several years constituted illegal sales of unregistered securities. That lawsuit started in December 2020 and entered its final phase this April. If Ripple wins that case or reaches a favorable settlement with the SEC, its price could certainly skyrocket.
Cardano has more long-term advantages
Cardano, like Ethereum, is a PoS blockchain that supports smart contracts and the development of dApps and other crypto assets. However, it was created to process transactions at a faster rate than Ethereum with more predictable fees.
Cardano currently processes its transactions several times faster than Ethereum. Its transaction fees, which are set by the size of a transaction and the necessary computation power, are also more predictable than Ethereum’s gas fees, which are determined through a “surge pricing” model based on the network’s fluctuating congestion rates.
Cardano created 31 billion tokens during its initial launch, and 26 billion of those tokens were sold to investors through a third-party company. The remaining 5 billion tokens were distributed to the Cardano Foundation, IOHK, and Emurgo. It currently has a circulating supply of 36 billion tokens with a maximum supply of 45 billion tokens. Like other PoS tokens, Cardano can be staked (locked up on its blockchain) for set periods to earn interest-like rewards.
Cardano will go through a major upgrade called the “Chang Hard Fork” by the end of July. That update should increase its speed, strengthen its security measures, and improve its scalability. But even after their latest upgrades, Cardano and Ethereum are both still significantly slower than Solana (CRYPTO: SOL), the world’s fastest PoS blockchain.
The bulls expect the Chang Hard Fork to make Cardano’s blockchain more appealing to developers and drive the token’s price higher. The recent approvals of Ethereum’s first spot price ETFs — which are set to start trading on July 23 — could also clear the way for similar ETFs for smaller PoS tokens like Cardano and Solana. These tailwinds could limit Cardano’s downside potential and bring back the bulls.
The better buy: Cardano
XRP and Cardano are both highly speculative investments, so you shouldn’t put any cash you can’t afford to lose in either of these tokens. But if I had to pick one right now, I’d buy Cardano because it natively supports smart contracts, it’s faster than Ethereum, its developer ecosystem is expanding, and it’s still evolving. Ripple’s potential victory against the SEC might temporarily drive its price higher, but it doesn’t have any clear long-term advantages against other cryptocurrencies.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Cardano, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
