Better Altcoin Buy: XRP vs. Ethereum

Better Altcoin Buy: XRP vs. Ethereum

Leo Sun, The Motley Fool

Wed, August 19, 2026 at 7:22 PM GMT+3 5 min read

Altcoins, which are cryptocurrencies other than Bitcoin (CRYPTO: BTC), are usually considered speculative and volatile investments. But they're also high-risk, high-reward tokens that could have much greater upside potential than Bitcoin.

Two of the market's most closely watched altcoins are XRP (CRYPTO: XRP) and Ether (CRYPTO: ETH). Both altcoins have struggled over the past year as fears of interest rate hikes and other macro headwinds drove investors toward more conservative investments, but will one recover faster than the other when the crypto market warms up again?

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A closer look at XRP and Ether

XRP is the native token of the XRP Ledger, a blockchain that was designed to provide fast, low-cost cross-border payments. It was created by the founders of Ripple, a fintech company that specializes in blockchain-based money transfers. It's still primarily used as a bridge currency for fiat transactions on Ripple's platform, but it's being adopted by other financial institutions (especially in Japan) to accelerate cross-border transactions with lower fees. The bulls believe XRP's value will rise as its ledger replaces those legacy financial rails.

Ether is the native token of Ethereum, the world's largest proof-of-stake (PoS) blockchain. As a PoS blockchain, it supports staking (locking up tokens to earn yield) and smart contracts (for developing decentralized apps and other tokenized assets). Every time a user makes a transaction on Ethereum, they must pay a "gas fee" in Ether. Therefore, Ether's value is driven by Ethereum's ability to draw more developers and decentralized app users to its ecosystem.

XRP doesn't natively support smart contracts or staking because it isn't a PoS blockchain. Instead, it uses pre-packaged, built-in transaction rules to support tokenized real-world assets (RWAs), non-fungible tokens (NFTs), and decentralized finance (DeFi) apps on its blockchain. To earn yield without staking, XRP holders can deposit their tokens on off-chain platforms.

What challenges are they facing?

Over the past 12 months, XRP's price fell 64%, and Ether's price dropped 53%.

XRP's price had surged to a multi-year high in 2025 after the SEC lawsuit against Ripple (over the sale of XRP tokens to fund its expansion) finally concluded with a lighter-than-expected fine. The approvals of its first spot price exchange-traded funds (ETFs) drove it even higher. But after XRP lapped those catalysts, it ran out of steam. The rise of stablecoins, which are firmly pegged to fiat currencies such as the U.S. dollar and the euro, undermined XRP's usefulness as a bridge currency for those fiat-denominated cross-border transactions. The lack of native smart contracts or staking features also limited the expansion of its ecosystem.

Ether's price hit a record high last year, but it fizzled as macro and competitive pressures mounted. As the crypto market's liquidity dried up amid a messier macro environment, Ether was often overlooked amid the shuffle between Bitcoin and the market's higher-risk altcoins. Competition from faster and cheaper PoS blockchains, like Solana (CRYPTO: SOL), also forced Ethereum to expand its Layer 2 (L2) rollup networks -- which bundle together its transactions and process them off-chain at higher speeds. However, that L2 expansion reduced Ethereum's gas fees and burn rates (removing less Ether from circulation), and boosted its total supply.

On the bright side, Ethereum's upcoming networking upgrades -- The Verge, The Purge, and The Splurge -- should restore that balance and improve its overall efficiency. It also remains the top developer-driven blockchain by a wide margin, and Ether's value should rise again as decentralized apps and tokenized assets attract more users and investors.

The better buy: Ether

XRP overcame its biggest challenges last year, but it lacks sufficient near-term catalysts. Ether lost its luster as the crypto market cooled off, but it still has plenty of irons in the fire. Both of these altcoins will remain under pressure in this market, but Ether has more upside potential.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.

Better Altcoin Buy: XRP vs. Ethereum was originally published by The Motley Fool