While it has been a year of massive gains for many popular cryptocurrencies, some of the hottest tokens are set to end 2021 in retreat. 

From their all-time high prices sert earlier this year, meme tokens Shiba Inu (SHIB 6.04%) and Dogecoin (DOGE 5.78%) are down 59% and 77%, respectively. Even crypto champion Bitcoin (BTC 1.96%) has been caught up in the crash and is down roughly 29%.

Two people looking at phone with shopping bags.

Image source: Getty Images.

To date, Bitcoin has always found a way to eventually recover, but history suggests recent crowd favorite Shiba Inu might never reclaim its previous highs. Dogecoin, which is similar to Shiba Inu in concept and speculative fervor, hit $0.73 per token back in May, and it has headed south ever since, settling around $0.16 and leaving many investors underwater on their holdings. 

Few merchants really want to accept cryptocurrencies

One of the selling points of crypto has been the potential for it to eventually replace traditional money, but the evidence right now seems to favor a different trend. Bitcoin, the token most widely accepted as payment by businesses, only has about 7,650 merchants willing to accept it as a payment option. Businesses have an even smaller appetite (tiny, in fact) for accepting Shiba Inu and Dogecoin. A mere 386 merchants take Shiba Inu, and 1,972 take Dogecoin. This comparison gives some credence to the idea that Bitcoin (and cryptocurrencies generally) are more vehicles for speculation rather than payment solutions.

Considering its limited use case right now, Bitcoin's $925 billion market capitalization doesn't make a whole lot of sense. A better alternative in this context is payments company Affirm (AFRM -1.41%), which serves 102,000 businesses with its buy now, pay later business and is valued at just $32 billion. It also happens to be a revenue-generating enterprise. 

The stock you should buy instead

There's a good reason I mentioned Affirm earlier. It's now the world's largest standalone buy now, pay later company, and it just signed a blockbuster deal with e-commerce giant Amazon (AMZN -1.51%). That's on top of an already lucrative partnership it has with Shopify (SHOP -1.21%), which serves over 1.7 million merchants. 

"Buy now, pay later" is an innovative twist on installment-based lending. Affirm's technology integrates with the online checkout of its merchant partners, allowing consumers to make purchases using a loan with no money down. 

It's different from other consumer finance products like credit cards, because there's no lengthy approval process, and buy now, pay later loans are typically short-term. Affirm seeks full repayment within three, six, or 12 months, whereas credit cards are completely open-ended. Affirm's interest rates are also more flexible, depending on the customer's creditworthiness, ranging from 0% to 30%. And since the consumer locks in the loan term and interest rate at purchase, they know exactly what the repayments are ahead of time. 

Affirm had 8.7 million active customers as of the recent first quarter of fiscal 2022, but its market opportunity is about to explode. 

Walking with giants

Amazon is responsible for up to half of all online sales in the U.S., which means Affirm has potentially locked up 50% of its addressable market with just this single deal. Affirm financed $8.3 billion worth of consumer purchases in fiscal 2021, and with the addition of Amazon and Shopify combined, that addressable market could balloon to over $600 billion per year. 

But what's potentially more lucrative over the long term is the customer pool Affirm will have access to. Amazon and Shopify together serve over 300 million members on their platforms, which offers Affirm an opportunity to grow by 3,300% from the 8.7 million customers it has today. 

It's a level of adoption that completely dwarfs all existing cryptocurrencies combined, let alone just the three popular ones mentioned above, and Affirm's revenue growth offers just another reason to buy its stock instead:

Metric

Fiscal 2019

Fiscal 2022

CAGR

Revenue

$264 million

$1.24 billion

67%

Data source: Affirm

The $1.24 billion in estimated fiscal 2022 revenue is based on up to $13.38 billion in gross merchandise value (the volume of purchases financed by Affirm) -- and it doesn't account for any contribution from the new Amazon deal. Therefore, there's a possibility this guidance could be blown out of the water. 

For investors holding onto cryptocurrencies that are struggling right now, it might be beneficial to diversify into a high-growth stock like Affirm. It generates real revenue, and it has a vote of confidence from some of the world's largest companies. It's a reach that most tokens are unlikely to ever experience, if results so far are any indication.