You don't need a fortune to get started in crypto. And a $500 starting investment could help set the foundation for enormous returns over the long term. Let's explore why Ethereum (ETH -2.48%) and Ripple (XRP -3.10%) look poised for lasting success.
1. Ethereum
With a market cap of $345 billion, Ethereum is the second-largest public cryptocurrency, worth almost 20% of the entire sector. The platform's developers are working hard to maintain this dominant position through an upgrade called The Merge, which could make running the blockchain more environmentally friendly and sustainable.
As you probably already know, Ethereum has fallen behind newer blockchains. Take, for example, Solana, which can handle 50,000 transactions per second compared to Ethereum's measly 15.
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This disparity has a lot to do with Ethereum's proof-of-work (POW) block validation mechanism where miners solve computational problems to verify transactions. This process is cumbersome and consumes real-world resources. An update aims to solve these issues.
According to its developers, Ethereum's main blockchain will combine with a parallel network called the beacon chain and transition to a full proof-of-stake (PoS) system where miners verify transactions using existing coins instead of solving puzzles. This change could result in a 99.95% reduction in Ethereum's total energy use and open the door for further improvements designed to tackle speed and scalability.
It is unclear when The Merge will go live, but the developers say it could occur a few months after June.
2. Ripple
Want a cryptocurrency with real-world utility? Look no further than Ripple. Despite ongoing legal uncertainty, this finance-focused blockchain's well-defined niche and impressive technical capabilities position it for long-term success in the competitive crypto industry.
While virtually all cryptocurrencies can store and transmit value, Ripple takes this further by optimizing its design to excel in this use-case. Transactions are fast and cheap -- processing in just three to five seconds for a fee of 0.0001 XRP tokens (each XRP is worth $0.65 at writing).
The blockchain's developer Ripple Labs also has an enterprise-level payment solution called RippleNet designed to help large companies move money across borders using Ripple's native token, XRP, as well as other traditional currencies. So far, the protocol boasts some high-profile partnerships, such as the Spanish multinational bank Santander and global payments giant American Express.
Ripple's real-world utility has caught the attention of U.S. regulators, who are considering whether its developers broke securities law when they launched the blockchain. No one knows how this issue will play out, but investors should remember that Ripple's developer is a separate entity from the XRP tokens you buy or sell on the exchanges.
Betting on crypto
Crypto is a hugely volatile asset class, which might scare some investors away. But with risk comes reward -- and a small opening investment could set the stage for potentially life-changing returns over the long haul. While nothing is guaranteed, Ethereum and Ripple look like they have what it takes to outperform the sector.
