The crypto market is heating up again. With the fourth Bitcoin(CRYPTO: BTC) With a seven-month halving in the rearview mirror and a crypto-friendly outcome in the 2024 elections, the leading coins appear poised for another skyrocketing rise. As of November 22, Bitcoin is up 27% this month, and Ethereum(CRYPTO:ETH) posted a richer gain of 36%.
But the biggest names aren’t always the best buys. The XRP(CRYPTO:XRP) token soared 136% higher in November. Is XRP a better way to build wealth in the crypto market than Ethereum or Bitcoin?
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Overall, Bitcoin and Ethereum should have more value than XRP in the long term.
Bitcoin aims to act as a general-purpose system for storing monetary value.
Ethereum was built to power automated financial systems and other software apps, which are the foundation of decentralized finance (DeFi).
XRP’s mission to provide fast, low-cost payments across international borders is still ambitious and legitimate, but it doesn’t compare to the grander visions of smart contracts and full-fledged digital currencies.
So I don’t expect XRP to outgrow Ethereum or Bitcoin forever. I imagine this could happen if another cryptocurrency (or an entirely new financial technology) replaces Bitcoin as the leading “digital gold” or if one of the so-called Ethereum killers offers an objectively superior smart contract platform. That would be bad news for the old crypto kings, but not necessarily good for XRP and its investors.
That said, XRP has a lot of room to grow before it takes on Ethereum and Bitcoin. This is currently the sixth largest cryptocurrency by total market value, far behind the giants at the top. It would be particularly shocking to see that XRP has a larger market cap than Bitcoin – but its value could multiply more than 20 times without raising that question, and I would have to assume Bitcoin didn’t rise over the same period. :
Cryptocurrency
Market capitalization
Price change of 1 year
Bitcoin
$1.93 trillion
167%
Ethereum
$395 billion
62%
XRP
$80 billion
136%
Data collected from CoinMarketCap on November 22, 2024.
Bitcoin aims to replace physical gold as a system for storing financial value. That’s about a $14 trillion market today.
The global volume of cross-border payments is much larger than that, estimated at around $190 trillion per year. But the fees, currency charges and service costs associated with these huge cash flows are much smaller: $193 billion in 2023.
So XRP aims for a smaller monetization opportunity. And keep in mind that the RippleNet payment service is known for transferring money with minimal fees. The token’s actual revenue target will therefore be well below the current banking system’s share of foreign money transfers.
Now you know how the long-term value of XRP compares to that of Bitcoin and Ethereum, and I’ve touched on the boundaries of this token’s target market. Bitcoin can clearly fill a role in your portfolio that XRP doesn’t even attempt to address, and the same can be said about Ethereum. A well-rounded cryptocurrency portfolio should have some exposure to the two biggest names in this sector.
I’m not saying you should sell your Bitcoin today and go all-in on XRP. Still, the XRP token seems undervalued and has plenty of room for growth in the coming years. The legal challenge brought by the U.S. Securities and Exchange Commission four years ago should be completed in 2025.
Money center banks around the world are taking blockchain-based payment systems more seriously than ever, with XRP playing a leading role in that adoption trend. And the RippleNet service is getting busier: the number of daily XRP payments has tripled in six months.
I could go on and on about positive trends in the Ripple space, from liquidity pools to central bank digital currencies, but you get my point. This fairly large cryptocurrency is going places.
So, in addition to the generally optimistic mood in the crypto sector, XRP has several growth catalysts at play. Don’t forget Bitcoin and also keep Ethereum in mind, but also make room for another winning name. A modest scoop of XRP tokens should serve you well in this bull market.
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Anders Bylund has positions in Bitcoin, Ethereum and XRP. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and XRP. The Motley Fool has a disclosure policy.
Should You Forget Bitcoin and Buy XRP (Ripple) Instead? was originally published by The Motley Fool
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