Cryptocurrencies are having a blockbuster year, with returns for some of the most popular tokens running circles around the S&P 500 stock market index. Dogecoin is one of them, rising more than 3,000% since Jan. 1. But as impressive as that sounds, it was up many times that amount back in May, and has been steadily trending down since -- more than 70% at Monday afternoon's prices.

Dogecoin's lack of adoption as a payment solution is preventing it from growing into more than just a vehicle for speculation, and that should worry investors who bought it near its high point. To date, just 1,680 small businesses have registered to accept Dogecoin, and that number is growing at 50 per month -- not exactly enough to build a significant global footprint. 

For investors looking to buy a piece of a successful financial technology platform, there are better alternatives. Affirm Holdings (NASDAQ:AFRM) integrates with online businesses to finance consumer purchases at checkout, and thanks to recent deals with leading e-commerce giants, it could have access to over 300 million new customers. 

A person looks at a laptop, holding their head in their hands.

Image source: Getty Images

Buy now, pay later

Affirm is now the most valuable player in the emerging buy now, pay later industry. It recently surpassed Australian company Afterpay, which last month agreed to be acquired by payments powerhouse Square for $29 billion. 

Buy now, pay later puts a new spin on installment-based consumer lending in a bid to disrupt the entrenched credit card industry. Credit cards can often have high limits, high interest rates, and open-ended repayment terms, which can make it difficult for consumers to eliminate their debts. Affirm offers flexible repayment time frames between three and 36 months, and interest rates between 0% and 30%, depending on credit worthiness. Additionally, buy now, pay later generally focuses on purchases below $1,500, which helps to keep consumers' debt obligations under control. 

Like all new technologies, BNPL is constantly evolving. Barriers to entry are low in the sector because the concept is simple to replicate, so competition is fierce. But Affirm has made adjustments to keep pace with its smaller competitors, and it will soon launch the digital Affirm Card, which will allow its customers to leverage the BNPL service everywhere -- not just with Affirm's merchant partners. 

Amazon and Shopify offer Affirm an unprecedented opportunity

Affirm has built an ecosystem that should be the envy of Dogecoin hopefuls, with over 7 million customers and 29,000 merchants. 

But new deals with global e-commerce leaders Shopify and Amazon could see Affirm grow its customer base by over 40 times the current level, as Affirm gains access to over 118 million Shop Pay users and 200 million Amazon Prime members. 

Additionally, Shopify and Amazon combine to sell almost $600 billion worth of goods each year, and eventually Affirm will be set to feature as a checkout option for all of those sales. Considering Affirm only financed $8.3 billion worth of consumer purchases over the last 12 months, this is a major growth opportunity that few companies ever see. 

But it's no surprise these giants are flocking to partner with Affirm. Buy now, pay later offers benefits to merchants by empowering customers with greater spending power, and a pilot program by Shopify found it can increase conversion by 50% and boost cart sizes -- all of which translates to higher revenue for businesses. 

Affirm's stock could be a great deal over the long term

From a value perspective, Affirm might not look attractive at current prices, since it's near all-time highs. But as explored above, the growth opportunity ahead of it could mean today's stock price looks cheap, in retrospect, a few years from now. 

It's worth noting that in the recent fiscal full-year 2021 earnings report, Affirm revealed powerful growth and increased its fiscal 2022 guidance, even though it excludes the benefits of its new Amazon deal -- that means there's upside potential to the already bullish estimates.

Metric

Fiscal 2021

Fiscal 2022 (Estimate)

Growth

Revenue

$870.5 million

$1.175 billion

35%

Gross merchandise value

$8.3 billion

$12.6 billion

52%

Data source: Affirm.

With quality companies like Affirm, we can see clear pathways for growth which make them a much more reliable investment than cryptocurrencies like Dogecoin. It's difficult to put a true estimate on the value of novelty tokens like Dogecoin because so few people are truly using it as a payment solution.

But if you're already holding Dogecoin at a much higher price and you're concerned about further losses, it's never too late to diversify your investments by adding a stock like Affirm, which has a whole lot of long-term growth potential. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.