XRP Surges While Shiba Inu Struggles: An Investor’s Guide

XRP (CRYPTO: XRP) has significantly outperformed Shiba Inu (CRYPTO: SHIB) in the past year. XRP, the native cryptocurrency of the Ripple blockchain, gained about 280% as it tackled major regulatory hurdles. In contrast, Shiba Inu’s price halved amidst skepticism over its long-term growth potential. Should investors favor XRP at its current price level while avoiding Shiba Inu? Let’s analyze these two volatile cryptocurrencies and determine which one is the better investment.

Comparing XRP and Shiba Inu

Ripple leverages its blockchain technology for real-time payments, remittance transfers, and currency conversion. The company introduced XRP in 2013 as its native cryptocurrency, pre-mining an entire supply of 100 billion tokens before trading began. Currently, approximately 58 billion tokens are circulating, while the remaining tokens are stored in Ripple’s escrow accounts. Ripple periodically releases these tokens to maintain liquidity, which can contribute to inflationary pressures.

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Ripple anticipated that its financial clients, including Travelex Bank and Sentbe, would adopt XRP over traditional fiat currencies. However, this has not occurred as Ripple’s blockchain lacks certain capabilities: it cannot mine other cryptocurrencies typical of proof-of-work (PoW) systems, nor can it develop decentralized applications or tokens like those built on proof-of-stake (PoS) systems.

In contrast, Shiba Inu emerged as a token on Ethereum‘s blockchain in 2020. Initially a PoW blockchain, Ethereum transitioned to a PoS system in 2022, which allows for smart contracts and the development of decentralized applications. Shiba Inu tokens can also be staked for rewards.

To enhance its developer ecosystem, Shiba Inu is promoting its Layer-2 blockchain protocol, Shibarium, which offers faster transactions and integrates with a decentralized exchange (DEX) called ShibaDEX, linking to other PoS tokens.

Developers pre-mined nearly 1 quadrillion Shiba Inu tokens before launching. However, over 40% of them have been burned, leading to a deflationary token model.

Key Drivers and Challenges

Recent price increases for XRP are largely due to the resolution of its regulatory struggles. The U.S. Securities and Exchange Commission’s lengthy lawsuit against Ripple, which initially claimed that the company’s ICOs were illegal sales of unregistered securities, has concluded with a settlement that was less severe than expected. This decision has prompted many leading crypto trading platforms to re-list XRP, while several companies have filed for spot price ETFs for the token.

Ripple’s ecosystem is also evolving. The company has begun integrating Ethereum-compatible smart contracts through a new sidechain linked to the XRP Ledger. Ripple aims to encourage tokenization of real-world assets on its blockchain and recently launched a stablecoin tied to the U.S. dollar. These strategies may diversify Ripple’s offerings and enhance XRP’s utility.

Conversely, Shiba Inu lacks similar positive developments. It is overshadowed by competing PoS blockchains such as Solana and Cardano for decentralized application development. Additionally, Dogecoin – initially a parody of Shiba Inu – has inspired more attention, especially with Elon Musk’s prominent backing.

Shiba Inu has also failed to gain interest in its own spot price ETFs. Developers and investors are hopeful for this milestone, yet major firms have not submitted SEC applications for Shiba Inu ETFs. The absence of institutional support could hinder Shiba Inu’s ability to set itself apart from other meme coins.

Conclusion: Why XRP is the Better Investment

While the current administration may ease federal regulation regarding cryptocurrencies, it is prudent not to rush into either investment at the present time. However, among the two, XRP appears to provide better growth prospects due to its backing by a developing financial ecosystem and the potential market impact of ETF approvals. Ripple’s expansion may stabilize XRP’s value and promote further increases. On the other hand, Shiba Inu could struggle to maintain relevance amid larger PoW and PoS competitors.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Cardano, Ethereum, Solana, and XRP. The Motley Fool’s disclosure policy is in effect.

The views and opinions expressed herein reflect those of the author and do not necessarily represent those of Nasdaq, Inc.