XRP (XRP +0.24%) and Shiba Inu (SHIB +0.37%) went in opposite directions during the past 12 months. XRP, the native cryptocurrency of the Ripple blockchain, surged about 280% as it overcame its biggest regulatory challenges. Meanwhile, Shiba Inu's price was cut in half as investors questioned its long-term growth potential. Should investors keep chasing XRP at these levels and avoid Shiba Inu? Let's review these two volatile cryptocurrencies and see which one is a better buy.
The differences between XRP and Shiba Inu
Ripple uses its blockchain to route real-time gross payments, remittance transfers, and currency exchange transactions. It launched XRP as the platform's native cryptocurrency in 2013, and it pre-mined its entire supply of 100 billion tokens before it even started trading. Only 58 billion of those tokens are in circulation today, while the rest remain locked up across Ripple's own escrow accounts. Ripple periodically releases those tokens to stabilize its liquidity, but that strategy makes it inflationary.
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Ripple originally hoped that its payment platform's financial clients -- including Travelex Bank, Tranglo, and Sentbe -- would adopt XRP instead of fiat currencies for their financial transactions. But that never happened, and Ripple's blockchain faced obvious limitations: It could neither be used to mine other cryptocurrencies like proof-of-work (PoW) blockchains nor develop decentralized apps and tokens like proof-of-stake (PoS) blockchains.
CRYPTO: XRP
Key Data Points
Shiba Inu is a token that was launched on Ethereum's blockchain in 2020. Ethereum was originally a PoW blockchain, but it transitioned to the more energy-efficient PoS mechanism in 2022. As a PoS blockchain, Shiba Inu supports smart contracts, which can be used to develop decentralized apps. Its tokens can also be "staked" to earn interest-like rewards.
It's been expanding that developer ecosystem with its own Layer-2 blockchain protocol Shibarium, which supports faster transactions, and its cross-chain decentralized exchange (DEX) ShibaDEX, which links its blockchain to other PoS tokens.
Shiba Inu's developers pre-mined its entire supply of nearly 1 quadrillion tokens before its launch, but it's already burned (or taken out of circulation) more than 40% of those tokens to tighten up its supply. That's why it's a deflationary token.
CRYPTO: SHIB
Key Data Points
The catalysts and headwinds
XRP's price was driven higher by the end of its regulatory challenges during the past couple of years. The U.S. Securities and Exchange Commission's protracted lawsuit against Ripple -- which alleged its initial coin offerings were illegal sales of unregistered securities -- finally ended with a slap on the wrist and a lighter-than-expected settlement. That victory drove most of the major crypto trading platforms to re-list XRP, and several crypto firms filed to launch their own spot price ETFs for the token.
Ripple's ecosystem is also expanding. It's been integrating Ethereum-compatible smart contracts into a new sidechain tethered to the XRP Ledger, urging investors to tokenize their real-world assets (like real estate, artworks, and other valuable objects) on its blockchain to grant the owner custody of the underlying asset, and it recently launched a new stablecoin pinned to the U.S. dollar. All of those moves might make Ripple a more diversified blockchain while turning XRP into a more useful cryptocurrency.
Shiba Inu hasn't benefited from as many near-term catalysts. Instead, it's being overshadowed by faster PoS blockchains like Solana and Cardano for developers of decentralized applications, while Dogecoin -- which Shiba Inu was originally launched as a parody of -- could attract much more attention as the top "doge"-inspired cryptocurrency as its big backer Elon Musk dominates the headlines.
Shiba Inu also hasn't attracted much attention for its own spot price ETFs. Its developers and investors certainly hope that it will cross that milestone one day, but none of the major firms have filed SEC applications for their own ETFs for the token. Without that institutional support, Shiba Inu could struggle to differentiate itself from the other meme coins.
The better buy: XRP
The Trump administration is expected to relax the government's oversight of the cryptocurrency market, but I wouldn't rush to buy either of these coins right now. Yet if I had to choose one of these tokens over the other, I'd pick XRP because it's backed by a growing financial ecosystem and has the potential upside from ETFs. Ripple's expansion could also stabilize XRP's price and drive it higher. Meanwhile, Shiba Inu could still struggle to justify its existence in the shadow of bigger PoW and PoS tokens.
