Better Crypto Buy Right Now: XRP vs. Cardano (ADA)

XRP (CRYPTO: XRP) and Cardano (CRYPTO: ADA) are both far below their all-time highs, and both have endured many months of falling prices. But don't take that to mean these two are equally worth buying.

The reasons for their decline differ, though both have suffered plenty as a result of the crypto bear market. Let's evaluate which is the better purchase.

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XRP is building for the market of the near future

The XRP Ledger (XRPL) is building out its capabilities to try to capture a share of the market for tokenized real-world asset (RWAs), which are crypto representations of ownership of things like stocks and bonds. The chain's tradeable tokenized assets reached about $323 million in value as of July 21, up from $130 million a year ago. The odds are good that the growth in those assets is just getting started.

On May 6, the chain settled the first cross-border tokenized U.S. Treasury redemption, and it did so in less than five seconds. That's one piece of evidence that financial institutions will find the XRPL useful as part of their technology stack.

Separately, there's also evidence that suggests there's real demand for XRP itself. The seven XRP U.S. spot exchange-traded funds (ETFs) have absorbed $1.4 billion in cumulative net capital inflows since their launch. Net ETF inflows are important because spot ETF holders tend to be passive allocators who don't sell on a whim.

In terms of where XRP will go in the future, the game plan of Ripple, its issuer, is likely to continue building up the network to be a better and better place to manage tokenized assets and perform financial tasks like trade settlement. To that end, it will be forging more collaborations with financial operators, and perhaps it will be doing more acquisitions too.

Cardano is in deep trouble in multiple areas

The question for Cardano is whether it can outrun the attrition of its ecosystem by pushing out more code.

The Van Rossem upgrade, which improves the network's smart contract performance, went live on July 18. The upgrade scheduled for after that, Leios, aims to lift the chain's throughput from 10 to 15 transactions per second (TPS) toward 1,000 TPS -- but even that will be pretty small in comparison to most other major chains.

Aside from those upgrades, the situation is not good. The chain's ecosystem is shrinking, and there isn't a clear set of reasons for new projects to prefer starting up or operating on Cardano instead of somewhere else with cheaper transaction fees or more on-chain capital -- or both.

TapTools, Cardano's most-used analytics platform, wound down on June 2. Days earlier, a treasury proposal to fund the 2026 Cardano Summit in Singapore failed to pass a vote. Its decentralized finance (DeFi) total value locked (TVL) fell to about $126 million by early June, and then to $69 million by mid-July; at its December 2024 peak, its TVL was near $693 million.

With the network's developer community alarmed by that steady loss of capital, in early June, Cardano's founder, Charles Hoskinson, posted a video warning of a coming "wave of failures" across the ecosystem, followed hours later by an "I'm taking a break" post that sent the coin's price sharply downward.

The biggest issue of all is that Cardano still needs to find a certain group of people who really want to use the chain to generate economic value. The Van Rossem and Leios packages will doubtlessly help to address some engineering questions about how the network handles traffic. The problem is Cardano doesn't have anywhere near a heavy enough load for it to need to be worried about handling it gracefully. There simply isn't any strategy to attract new capital or new users.

Therefore, XRP is the better buy.

Institutions are settling transactions on its ledger already, and it's developing even more features to cater to them and increase their utilization of its network. In contrast, Cardano is openly struggling, and the lifeboats it's reaching for will probably not take it where it wants to go.

Alex Carchidi 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.