Ethereum vs. XRP: Which Is the Better Long-Term Choice?

The cryptocurrency market has never lacked vibrancy, but this year has truly been a tumultuous journey for investors. Bitcoin has doubled its value compared to the same period last year and reached a new peak beyond the six-figure mark. However, it’s not just Bitcoin that is in the spotlight; two other prominent altcoins – Ethereum and XRP – have also drawn attention thanks to strong bullish trends. Despite differences in technology and models, the future of both is closely linked to the traditional financial system. In particular, the explosion of stablecoins – digital currencies pegged to fiat currencies – will have a significant impact on both Ether and XRP. With the Genius Act just passed, the prospect of stablecoins being more widely adopted is becoming more feasible than ever. XRP And The Potential From Banks From the beginning, the investment thesis of XRP is based on the goals of: speeding up, reducing costs, and providing greater security for cross-border payments. Ripple – the company behind XRP – has developed this blockchain and token to address major limitations in the traditional payment system: slow transactions, high fees, and heavy reliance on intermediaries. However, the major issue lies in the fact that banks can use Ripple's blockchain without having to hold XRP. In fact, most major financial institutions choose this route. This means that the benefits of saving time and costs are still achieved, but the demand to buy XRP does not increase accordingly. The only exception is the On-Demand Liquidity product (ODL), where banks can use XRP as a bridge asset to solve liquidity issues. Unfortunately, most major banks, which do not lack liquidity, have no incentive to accept the risks of a highly volatile asset like XRP. Notably, Ripple has just acquired Rail – a stablecoin payment platform. This move indicates that Ripple is positioning itself in the stablecoin game rather than relying entirely on XRP. If stablecoins are widely adopted, the role of XRP could even be diminished, as stablecoins themselves could replace XRP in many cross-border payment scenarios. Ethereum – The Backbone of the Stablecoin Market While XRP is at risk of being "invaded" by stablecoins, Ethereum is in the opposite position: the more stablecoins develop, the more Ethereum benefits. The majority of transactions for leading stablecoins, especially USDC, occur on the Ethereum network. This means that each stablecoin transaction requires a gas fee paid in ETH. This is the mechanism that directly ties the demand for ETH to the growth of stablecoins. Not only that, Ethereum also has a burn mechanism – a portion of ETH used to pay for gas fees will be burned and permanently removed from circulation. The more activity there is, the larger the amount of ETH that gets burned, thus creating pressure to reduce supply and support long-term value. The question arises: XRP also has a burn mechanism, so what is the difference? The difference lies in the scale. On the XRP network, the amount of coin burned per transaction is extremely small, almost having no impact on the total supply. In contrast, the amount of ETH burned is large enough to create a noticeable impact on market value. Long-Term Choice: ETH Outperforms XRP Looking beyond stablecoins, Ethereum is also the platform for a multitude of decentralized applications (DeFi), NFTs, and the trend of tokenizing real assets (securities, real estate…). These capabilities open up tremendous potential, helping Ethereum maintain its position as the "global computer" of blockchain. Meanwhile, the future of XRP largely depends on the decisions of financial institutions and Ripple's own stablecoin development strategy. Instead of benefiting, XRP may see a decrease in demand due to stablecoins. ➡️ Conclusion: If stablecoins truly become a major driver for the next wave of cryptocurrency, then Ethereum is the clear winner. The direct link between stablecoins and the Ethereum network, along with the burn mechanism and vast application potential, makes ETH a much more attractive long-term investment compared to XRP.