Is Bitcoin or XRP More Likely to Be a Millionaire-Maker?

Investors have enjoyed tremendous gains in the cryptocurrency market during the past year. Bitcoin (CRYPTO: BTC) has been a big winner, roughly doubling in price, only to be outdone by XRP (CRYPTO: XRP), which has surged almost 400%.

Bitcoin has long been the flagship cryptocurrency. Meanwhile, XRP has gained significant momentum since the resolution of litigation between the coin's creator, Ripple Labs, and the Securities & Exchange Commission (SEC), which alleged that the coin's introduction amounted to a sale of unregistered securities. That removed some uncertainty that had weighed on XRP's price for several years.

But which token is more likely to deliver life-changing returns to investors?

Here is what you need to know.

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Bitcoin and XRP serve different purposes

Cryptocurrencies lack tangible value, unlike hard assets like real estate or precious metals, or stocks, which represent real businesses with revenue and profits. That's why cryptocurrency prices tend to be more volatile, and why it's harder for a coin's price to increase over time without some purpose or utility.

Many view Bitcoin as a digital version of gold, a potential store of value that investors acquire to protect against the steady erosion in value of a fiat currency like the U.S. dollar, caused by years of government borrowing and quantitative easing by central banks, both of which can help increase the money supply and stoke inflation.

XRP is the native token on the XRP ledger, a blockchain-based network designed to facilitate cross-border transactions. It's an alternative to SWIFT (Society for Worldwide Interbank Financial Telecommunication), a global messaging network banks use. The XRP ledger can perform transactions faster and at lower fees than SWIFT. It represents a potential new-age and superior avenue to moving money across the global economy.

Comparing the floor and ceiling between these two tokens

Put simply, Bitcoin probably has a higher floor.

Even at a $2.3 trillion market value, Bitcoin still has room to grow relative to other assets in the global economy, which add up to hundreds of trillions of dollars in total value. Bitcoin becomes increasingly entrenched in the economic landscape as society adopts it. Some corporations have begun keeping Bitcoin on their balance sheets, and the U.S. government announced a strategic Bitcoin reserve earlier this year.

Developments like these all further reinforce Bitcoin's legitimacy and, thus, its value. Again, cryptocurrencies have historically been very volatile. And even though Bitcoin's price has fluctuated during the years, its steady and continued adoption is a sign that it's probably here to stay.

But which has the most upside? XRP, with a much smaller fully diluted market value of just $156 billion, has a strong argument here.

The SEC lawsuit cast a shadow of doubt over XRP, which likely stunted its adoption. Institutions are unlikely to use a new technology while it is associated with such a dispute. Now that the lawsuit is over, it's game on. It will take time, but there have been some encouraging developments. For instance, multiple financial institutions are launching XRP-backed exchange-traded funds.

Additionally, Ripple Labs created a stablecoin pegged to the U.S. dollar, combining the technological capabilities of blockchain with the stability of the existing fiat monetary system. Ripple's stablecoin uses the XRP ledger, so any network volume resulting from its success would probably benefit XRP.

Which is more likely to be a millionaire maker?

Cryptocurrencies are still relatively new in the broader asset landscape, and it may take years for either asset to gain the recognition and trust it needs to realize its full potential.

Today, Bitcoin is far closer to realizing that potential than XRP, and that makes it the more likely millionaire-maker right now. XRP's use cases are only just beginning, and SWIFT still dominates cross-border payments, which was the initial purpose of XRP and the XRP ledger. It will eventually have to mount a successful challenge to SWIFT.

Bitcoin has grown to become a mainstream asset and still has sufficient room to increase in value, which can make investors very wealthy, even if it takes another decade or longer to unfold. Either way, investors looking for a get-rich-quick winner will likely be disappointed.

Instead, play the long game. Including Bitcoin and XRP as small components within a diversified portfolio could help you generate returns with both over time, while minimizing the risk of significant losses if either one doesn't work out.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and XRP. The Motley Fool has a disclosure policy.