Better Buy: XRP vs Bitcoin

The crypto market is abuzz after a bit of a lull in March. Things are getting active and volatile again.

For example, Bitcoin (BTC -2.28%) is up 3% in five hours as I'm writing this in the morning of March 31. The oldest and largest cryptocurrency is also down 5% in the last week and 7% in a month.

Likewise, the rising XRP (XRP -1.94%) coin has gained 4.4% in 5 hours, but it still dropped 17% in a week and 39% in a month.

Crypto investors are cycling through several emotions and attitudes these days. Sometimes it looks like the Trump administration will send the whole crypto sector to the moon. Five minutes later, people are racing for the exits because of new tariffs and rising inflation risks. Nobody wants to hold speculative cryptocurrencies in a shaky economy, right?

I'll revisit these sentiments in a minute. First, you should know that I'm a crypto buyer in general. I expect the best of these newfangled currency and transaction systems to gain value in the long run. If you disagree with this basic principle, you'll probably be happier reading about the best dividend stocks and gold-based investments to hold in the long run. Go ahead; it's OK. I'll be here if you ever change your mind.

On that note, I want to see whether XRP or Bitcoin is the better investment in April 2025. Has a modest discount on "digital gold" opened a game-changing buying window? Will XRP bounce back from this big dip with a jet pack on its shoulders?

Let's find out.

What makes Bitcoin special?

"Bitcoin maximalists" believe that Bitcoin is the only cryptocurrency that matters. It was created to hold (and grow) monetary value in the long run, and no other digital asset can replace it. If you're investing in this sector at all, you should stock up on actual Bitcoin holdings, perhaps supplemented with exchange-traded funds (ETFs) based on spot Bitcoin prices such as the popular iShares Bitcoin Trust ETF (IBIT -5.59%). Some might consider stocks in companies that own, buy, and perhaps create Bitcoin.

But that's kind of stretching the "maximalist" idea a bit. Strategy (MSTR -8.84%) chairman Michael Saylor might concede that his own company could be a strong investment, since Strategy, formerly known as MicroStrategy, is pulling every available lever to buy more Bitcoin. But really, owning Bitcoin itself is the best way to store cash in Saylor's opinion.

From this point of view, every Bitcoin price drop looks like a buying opportunity. If Bitcoin is destined to rise from less than $100,000 to several million dollars per coin in the long run, perhaps it's best just to dollar-cost average this cryptocurrency and keep investing a fixed amount every month, no matter what the price chart looks like.

The secret sauce in XRP's value-building recipe

XRP is a different story.

The digital coin at the heart of the Ripple payment system focuses on quick, easy, and low-cost transactions. It was created to facilitate border-crossing payments from one country to another, lowering barriers and costs from the clunky processes traditional banks use.

Ripple CEO Brad Garlinghouse recently clarified that XRP-powered transactions could replace the old-school Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system, which adds large processing fees and typically takes several days to complete a simple money transfer.

"The market opportunity here is massive," Garlinghouse said in a Fox Business interview. "You've got trillions of dollars that is flowing cross-border globally and is still dominated by SWIFT."

Ripple is not the only modern alternative to the increasingly obsolete SWIFT solution, of course. International payments may sound like an easy thing to do, but you have to handle a variety of local currencies and regulations. In a perfect world, you'd simply send out a $10 payment and watch 100 Swedish crowns drop into the payee's Scandinavian bank account. The RippleNet service comes close to this ideal, but so do alternatives such as PayPal's (PYPL -8.11%) HyperWallet, the enterprise-scale Payoneer (PAYO -10.66%) option, or the Wise (WIZE.Y -4.79%) platform.

So people and businesses sending money abroad have several options. Ripple stands out in this crowd thanks to its global network of local banking partners and blink-and-you-missed-it transaction processing.

As Garlinghouse noted, Ripple is addressing a massive market with real business prospects. Capturing just a small slice of this opportunity could create a ton of coinholder value, and this low-cost option could inspire growth in the border-crossing market, too.

XRP is not focused on value storage. It's all about modestly priced but still fee-generating transactions. The RippleNet service is already in full swing and poised for significant growth, especially if it can find more users in America's evolving framework of crypto regulations.

Different strengths for different investors (but it's hard to beat Bitcoin)

XRP and Bitcoin are both cryptocurrencies, but they don't have much else in common.

• Buying Bitcoin is kind of like investing in a digital form of gold bars, socking away your cash in a safe and potentially value-building form of storage for the long haul. The digital currency has fallen slightly in recent weeks, but patient investors could build a lot of wealth with Bitcoin over the years.
• Buying XRP is more like investing in the RippleNet international payment service. This coin builds value as more people use it for the intended purpose, more like an active growth stock than a lump of gold. It's hard to pin a fair value on this growth story, especially since Ripple isn't publishing quarterly financial reports yet, but XRP investors have seen stale or even negative returns in the last five years. November's surge seemed to sync XRP's market value a little tighter to its promising long-term business prospects.

They serve the needs of different investor types, though nothing is stopping you from owning both coins. That said, you're probably better off building a stable Bitcoin base before adding XRP's exciting growth story to your crypto portfolio. Diversification is at least as important in the crypto market as is it on Wall Street.