XRP vs. Ethereum: Which Cryptocurrency Has More Upside in 2026?

Blockchains can stack new features at the same pace and still deliver wildly different outcomes for investors who buy their coins. The difference usually comes down to which asset is better at capturing value from the activity on its network.

So let's tee up a face-off between XRP (CRYPTO: XRP) and Ethereum (CRYPTO: ETH). Both ecosystems are shipping meaningful upgrades and pitching big plans for 2026 and beyond, but in my estimation, one is more likely to deliver a good return to investors.

Image source: Getty Images.

XRP is building for one specific crowd

Ripple, which develops and markets the XRP Ledger (XRPL), aims to make XRP a fintech solution for financial institutions. To serve that goal, this year it's planning to develop features to appeal to that group of users specifically, like decentralized asset markets where every trader's identity is verifiable, privacy-preserving capital transfers, and a native lending protocol that's easy to use.

On paper, that roadmap fits the use case of real-world asset (RWA) tokenization well, which is bullish because tokenization is starting to really take off. For the uninitiated, tokenization is simply the practice of representing ownership of assets as crypto tokens so they can be issued, transferred, and managed using fast, cheap blockchain settlement. And Ripple is positioning XRP as a leader in these tokenized assets, leveraging the functions described above, as well as a suite of regulatory compliance tools that help users have confidence they're interacting with the technology in a legally defensible way.

But skeptical investors will notice that something's missing here.

XRP itself does not automatically capture a large share of the value of the assets or activity on its chain. In fact, the XRPL's transaction fees are quite low, which, while appealing for users, means there's not much immediate effect on the coin's price when activity volume picks up. Technically, a small portion of XRP is burned with each action taken on the network, but it's so tiny that it's practically insignificant unless large quantities of capital are moving repeatedly over long periods.

So it takes a lot of new adoption of XRP to mechanically push the price higher, though it's still entirely possible for the coin's price to rise as investors buy it.

Ethereum can find upside from multiple sources

Ethereum's development plan for 2026 looks three-pronged: scale the chain's throughput, improve its usability by decreasing costs and transaction time, and improve the base layer with new security features, among others.

Each of these elements is especially important in the context of the current discussion because Ethereum has two powerful value-capture channels that XRP largely lacks. First, a portion of every Ethereum transaction cost is burned, and the transaction burns a significantly larger amount of ETH than the equivalent function on the XRPL. That creates a more palpable relationship between activity on the network and higher prices of the coin. Second, Ethereum's proof-of-stake design ties its network security to the staking of ETH, and staking coins delivers a bond-like yield that in turn gives long-term holders a native reason to keep their capital on the chain.

Ethereum still has some weaknesses, starting with its lack of a specific target audience for its features. Compared to the XRPL's, its compliance tooling is a chaotic hodgepodge of third-party solutions, and it's unlikely that financial institutions would be very interested in engaging with its ecosystem in a serious way as a result. Beyond that, it can still be fairly expensive to use during surge periods.

Nonetheless, unlike XRP, Ethereum has never needed major financial institutions to onboard their capital to grow; its decentralized finance segment is the crypto sector's largest by far, with nearly $54 billion in value locked. So there are plenty of users on the network today, regardless of its warts, and the upcoming upgrades will likely entice even more capital.

Therefore, for the rest of 2026, Ethereum has more upside for those who buy it now. XRP can still beat it, but only if institutional flows shift materially toward XRPL while Ethereum stumbles at the same time -- and that's a pretty narrow path.

Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum and XRP. The Motley Fool has a disclosure policy.