Better Crypto Buy: Bitcoin vs. XRP

Key Points

• Bitcoin and XRP prices have spiked during the past year.

• Bitcoin is widely viewed as a store of value, and XRP could accelerate foreign currency exchanges.

• Bitcoin enjoys some credibility among financial institutions, while XRP has yet to prove its long-term viability.

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There are thousands of cryptocurrencies available to investors to buy, but two that have seen consistent price increases recently are Bitcoin (CRYPTO: BTC) and XRP (Ripple) (CRYPTO: XRP), which are up 106% and 495% during the past year, respectively (as of Aug. 6.)

Those gains aren't easily ignored, but if you could buy only one of these two cryptocurrencies, which is the better long-term investment? Here are a few key details about Bitcoin and XPP, as well as some drawbacks, to help you make your decision.

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The case for Bitcoin

Bitcoin has a huge advantage over XRP and nearly all other coins because it was the first cryptocurrency. Being the first doesn't always mean you're the best, but in the case of cryptos, having the first-mover advantage has given Bitcoin a level of credibility that most other coins lack.

And it's not just that it's the oldest coin. The fact that there's also a limited supply of coins has made it attractive to institutional investors as well. There can only be 21 million total Bitcoins in circulation, of which about 20 million already exist, and this scarcity has helped drive the value higher.

This helped spur the federal approval of Bitcoin exchange-traded funds (ETFs) last year, letting investors buy an ETF on a stock exchange that tracks the coin's value. And the fact that large financial institutions, like BlackRock, have sponsored Bitcoin ETFs has given credibility to the coin that XRP doesn't have.

Two of the most popular ETFs are iShares Bitcoin Trust and Grayscale Bitcoin Trust ETF, and it's estimated that all the Bitcoin ETFs have about $150 billion of assets under management. That's a huge amount, especially considering that the first spot Bitcoin ETF launched in 2024. This speaks to the overwhelming popularity of Bitcoin and its consistent ability to attract new investors.

Why investors like XRP

With gains of 495% during the past year, it's an understatement to say that the coin, created by Ripple Labs, has become a top cryptocurrency. XRP has some real-world functionality as a bridge currency for settling transactions between foreign currencies. It can also process transactions faster and cheaper than traditional financial technologies.

But adoption of XRP for this use case, while growing, is still limited. That hasn't stopped its value from soaring, though, partly because investors anticipate the introduction of XRP ETFs. Some investors are hoping that the funds will give a similar credibility to XRP that they have for Bitcoin.

XRP's value has also jumped because the Trump administration has taken a more hands-off approach to regulating cryptocurrencies. I think it's important to understand this in the context of XRP's rapid price increase because the coin has gained so much in such a short amount of time -- and with little real-world use -- that it's very likely XRP is overvalued now.

Still, some believe XRP could continue its price surge if spot XRP ETFs are approved this year, pushing the value higher as a result.

Here's why Bitcoin is the better crypto to own

All cryptocurrencies have a certain amount of speculation baked into them, but XRP is much more speculative than Bitcoin at this point, which is why I think Bitcoin is the better buy.

Bitcoin has been around for about 15 years, has already survived many upswings and sell-offs, and already has widespread acceptance from large financial companies. That doesn't mean it is a foolproof investment, of course, but it does lend the cryptocurrency a certain amount of credibility.

Although XRP is showing no signs of slowing down, investors will likely see more dramatic value swings than with Bitcoin. And because there are already hundreds of billions of dollars invested in Bitcoin through ETFs, the coin has proved that it has widespread acceptance among investors. That's a good sign for Bitcoin's longevity, and something XRP may take many more years to achieve, if it ever does.

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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.