XRP vs. Dogecoin: Which Crypto Will Make You Richer?

XRP (CRYPTO: XRP) and Dogecoin (CRYPTO: DOGE) are two cryptocurrencies going in very different directions. Even after the recent downturn, XRP is up 12% over the last year. Dogecoin is down 65% as of Dec. 1.

Of course, fortunes can change quickly in the crypto market. Are you better off with the more successful cryptocurrency in XRP, or should you buy the dip on Dogecoin? Fortunately, this head-to-head matchup has a clear answer.

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The fundamentals favor XRP

XRP has a few important advantages over Dogecoin as an investment. It's the native cryptocurrency on the XRP Ledger, a blockchain designed to process fast and affordable international payments for financial institutions. Ripple, the company that built XRP and the XRP Ledger, works with over 300 banks. Most of those banks use Ripple's payments network and not XRP, but the hope is that growing usage of Ripple will lead to greater adoption of XRP, as well.

Another point in XRP's favor is that it has a maximum supply of 100 billion tokens. There are currently 152 billion DOGE in circulation, and about 5.3 billion more enter the market every year. A continued influx of new coins can dilute a cryptocurrency's value, unless demand rises accordingly. In XRP's case, the token limit provides some degree of built-in scarcity.

Cryptocurrencies are unpredictable. There's no guarantee either XRP or Dogecoin will perform better, and truth be told, they're both high-risk investments. Because of the risk involved, you should be cautious about how much money you put into either one.

But XRP has more going for it as an investment. It has real-world utility, whereas Dogecoin is a meme coin intended solely for amusement. With that and XRP's supply limit, XRP looks more likely to be successful.

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