Key Points

• XRP is a more efficient payment method than Bitcoin, offering fast transactions and sub-$0.01 fees.

• It’s designed as a cross-border payments solution for financial institutions, but it hasn’t been widely adopted.

• While Bitcoin is the more proven investment, XRP also has potential if it can increase usage with issuer Ripple’s banking partners.

• 10 stocks we like better than XRP ›

Bitcoin (CRYPTO: BTC) is the largest cryptocurrency by a wide margin, worth nearly $2 trillion (as of Jan. 14). Because of its value and the immense cost of buying just 1 BTC, many crypto investors prefer to look for altcoins — a term for all the cryptocurrencies other than Bitcoin.

A popular choice is XRP (CRYPTO: XRP), which has a market cap of $127 billion. That theoretically gives it more growth potential, and over the last five years, XRP has increased by 666% compared to Bitcoin’s returns of 169%.

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If you’re wondering whether you should invest in XRP instead of Bitcoin for your crypto portfolio, here’s what you need to know.

Image source: Getty Images.

Key differences between Bitcoin and XRP

Bitcoin and XRP are both decentralized digital currencies that use blockchain technology to record transactions. Bitcoin was the first, and its anonymous founder launched it in 2009 as a digital currency for online payments, with no reliance on a central banking system.

XRP has a much different origin story. Ripple, a private company, launched XRP in 2012. Where Bitcoin’s purpose was to eliminate the need for financial institutions, Ripple designed XRP to work with financial institutions, making cross-border payments faster and cheaper.

Of the two, XRP works much better as a payment method. Transactions typically process in three to five seconds and cost well under $0.01. Bitcoin transactions, on the other hand, normally take about 10 minutes, and the current average fee is just over $0.80.

However, hardly anybody uses Bitcoin as a payment method anymore. It’s an investment, often referred to as a form of digital gold. A fairly low maximum supply of 21 million BTC helps with that by providing built-in scarcity. XRP exists in more of a middle ground between investment and payment method.

XRP’s role in the global banking system

The value of XRP is tied to its issuer. Ripple offers a blockchain-based global payments network, Ripple Payments, which banks can utilize for fast and affordable international transactions. Ripple Payments includes an On-Demand Liquidity (ODL) feature that incorporates XRP.

Banks have traditionally maintained pre-funded accounts with foreign currencies. If a bank uses ODL with Ripple Payments, it can instead convert its local currency to XRP to transfer funds. The recipient can then convert XRP into its own currency.

As financial institutions adopt XRP for ODL, demand will likely grow, and the price should increase. There are a few hurdles this cryptocurrency has to overcome, though.

While Ripple has partnered with over 300 financial institutions, many of them only use Ripple Payments without ODL. In the second quarter of 2025, $1.3 billion in transactions were processed through ODL, according to Digital Asset Solutions. Such small payment volume won’t drive much growth for XRP.

Ripple also launched a stablecoin, Ripple USD (CRYPTO: RLUSD), in December 2024. Stablecoins aim to maintain the same value as another asset — in Ripple USD’s case, the U.S. dollar. This could potentially reduce demand for XRP if banks prefer a stable asset for ODL instead of XRP, which is highly volatile.

XRP has had several growth catalysts since late 2024. It surged after the election of Donald Trump as president, and issuer Ripple’s five-year lawsuit with the Securities and Exchange Commission (SEC) came to an end in August 2025. The SEC would go on to approve the first spot XRP ETFs in November 2025. But for XRP to take the next step, usage by financial institutions will need to increase.

Bitcoin or XRP?

I wouldn’t recommend forgetting about Bitcoin and buying any other cryptocurrency instead, XRP included. Bitcoin accounts for nearly 60% of the value in the entire crypto market, and although it isn’t always the top performer, it has consistently set new all-time highs in every bull market. XRP still hasn’t topped its all-time high from 2018. If you invest in cryptocurrency, it makes sense to have Bitcoin in your portfolio.

That said, you may want to hold altcoins, too, in which case XRP is worth considering. It has a potentially lucrative use case as a digital currency for financial institutions. With XRP’s speed and low costs, plus Ripple’s payments network, it could be a long-term winner.

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Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.

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