The crypto sector has been hot this year, as President Donald Trump has made it a priority to make the U.S. the crypto capital of the world. Among other things, the Trump administration plans to establish a strategic U.S. Bitcoin reserve and signed executive orders designed to make it easier for people to invest in crypto in their retirement portfolios.
Two of the more popular cryptocurrencies are XRP (XRP 1.21%), the third-largest cryptocurrency by market cap, and the meme token Dogecoin (DOGE 4.64%), the eighth largest (as of Sept. 12). Which is more likely to be a millionaire maker?
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XRP: A potential disruptor of international payments
Most cryptocurrencies are evaluated based on the technological capabilities of their networks and the potential to apply those to real-world use cases. XRP's network was structured to disrupt international payments by helping traditional financial institutions and individuals move money more efficiently.
XRP has the potential to process 1,500 transactions per second (TPS). True, other crypto networks can process much more, but XRP was created by the company Ripple with a specific purpose in mind.
Ripple is attempting to bridge the gap between the crypto world and mainstream finance by offering capabilities including instant payments, stablecoins, and custody solutions. The company already has many traditional bank customers. Ripple has also acquired a large prime broker called Hidden Road and launched its own stablecoin called RLUSD, for which XRP can be used as a bridge token.
CRYPTO: XRP
Key Data Points
Ultimately, Ripple's Chief Executive Officer Brad Garlinghouse thinks XRP has the potential to steal volume from SWIFT, the Society of Worldwide Interbank Financial Telecommunication, a messaging system that allows banks globally to send payment instructions to one another. The big differentiator, according to Garlinghouse, is that the SWIFT system requires banks to prefund accounts in multiple countries and hold reserves. Ripple instead uses XRP to allow real-time liquidity and complete transactions in seconds at minimal cost, so banks don't need to necessarily hold reserves, which frees up capital and enhances liquidity.
Another catalyst would be the launch of a U.S. XRP spot exchange-traded fund (ETF), pending approval by the Securities and Exchange Commission (SEC). Although this is taking longer than some expected, betting markets still anticipate that approval is likely to happen this year.
Dogecoin: The meme token that won't go away
Dogecoin is widely viewed as the original meme token, launched as a joke. To everyone's surprise, the meme token took off on social media and showed the power of virality. Celebrities like Elon Musk and Mark Cuban embraced the token and even began offering ways to use it as a form of payment in their various businesses.
Despite its popularity, Dogecoin has never had much real-world utility, and its network is not particularly strong from a technical perspective. Furthermore, the token is also not a store of value because 5 billion new tokens are issued each year.
CRYPTO: DOGE
Key Data Points
In recent months, Dogecoin enthusiasts have proposed adding a Layer-2 scaling solution to the network, which could process transactions off the main network, boosting processing speeds without increasing congestion or fees. However, there's no knowing if this will happen.
Dogecoin also looks to be in line for a spot ETF, with the betting markets also speculating that the SEC will approve one before year-end. Spot crypto ETFs boost liquidity and provide another easy way for investors to gain exposure, so this would be a positive catalyst.
Which is more likely to make you a millionaire?
Making long-term crypto price predictions is very difficult because cryptocurrencies don't generate cash flows or earnings like a publicly traded stock. Both XRP and Dogecoin have been volatile and are heavily influenced by the gyrations of the broader crypto market. But if I did have to pick one, it would definitely be XRP, which is bolstered by the strong Ripple ecosystem and has real potential to disrupt the international payment system.
I still think the token will be volatile, and there is certainly competition from other strong blockchain networks. Ultimately, I think a small, speculative bet on XRP makes sense. I have no interest in Dogecoin right now.
