Ether (CRYPTO: ETH) and XRP (CRYPTO: XRP) have both generated life-changing gains for their patient long-term investors. A $10,000 investment in Ether made 10 years ago and held would have blossomed into a holding worth $52.85 million today. A similar investment in XRP would be worth $4.19 million.
Both experienced steep climbs and sharp falls along the way to those impressive returns. But which of these high-flying cryptocurrencies has a brighter future?
Ether is the native token of the Ethereum blockchain. It was once mined using an energy-intensive proof-of-work (PoW) validation mechanism like Bitcoin (CRYPTO: BTC), but Ethereum transitioned to the more energy-efficient proof-of-stake (PoS) mechanism during “The Merge” in 2022.
After that network upgrade, Ether could no longer be mined. It could only be “staked” — locked up on the blockchain for a period of time — a process that earns the staker interest-like rewards in the form of new tokens. It also added support for smart contracts, which can be used to develop decentralized apps (dApps), non-fungible tokens (NFTs), and other crypto assets. As a result, Ether became valued more on the growth of its developer ecosystem than on the relative scarcity of its token. Its core Layer 1 blockchain isn’t as fast as newer PoS blockchains like Solana (CRYPTO: SOL), but its transactions can be bundled together and processed at much faster speeds across its Layer 2 blockchain solutions.
Ether has a circulating supply of 120.7 million tokens, and it becomes deflationary when its network activity rises because some Ether is burned (removed from circulation) with each transaction as a “gas fee.” But it becomes inflationary when its network activity declines, so it needs its developers to stay active to keep tightening up the coin supply.
XRP is the native token of the XRP Ledger, a blockchain that was created by the founders of Ripple Labs — a fintech company that promoted its blockchain as a faster, cheaper, and more secure alternative for moving money across borders than SWIFT transfers. But in 2020, the Securities and Exchange Commission (SEC) sued Ripple for selling its XRP tokens to fund its expansion and argued that XRP should be classified as a security. As a result, Ripple lost some of its top customers and the leading crypto exchanges delisted XRP.
