Better Stablecoin Buy: PayPal vs. Ripple (XRP)

There are two up-and-coming stablecoins that are starting to make some noise right now within the $250 billion stablecoin industry: PayPal USD (CRYPTO: PYUSD) and Ripple USD (CRYPTO: RLUSD). Both now rank among the top 10 stablecoins by market cap, and both have an expanding set of potential use cases.

So which is the better buy right now?

$1 forever

It's important to point out at the outset that "better buy" in this context does not mean "better investment." After all, both PayPal USD and Ripple USD are stablecoins that are pegged 1:1 to the U.S. dollar. Theoretically, you should also be able to exchange either one for $1 at any time.

Image source: Getty Images.

That also means that, years from now, both will still be trading for $1. There won't be a "better investment" because neither will change in price. Unless one of them loses its dollar peg, there won't be any meaningful way to compare them head-to-head.

So we'll need another way to determine which one is the "better buy," and the best possible litmus test is utility. In other words, how can we utilize or deploy these stablecoins in our everyday lives?

PayPal's stablecoin

PayPal USD appears to have the clear advantage in terms of utility. As you might have inferred from the name, this is PayPal's official stablecoin. The stablecoin launched in August 2023, but it has only been recently that it has been in the spotlight, thanks to the rapid growth within the stablecoin industry.

I've bought some PayPal USD for my own account, and I've been impressed with how easily it can be integrated into the full PayPal experience. For example, when I open the PayPal app on my phone, I can see my PayPal balance, several other PayPal accounts, and my PayPal crypto account. It's easy to move money around all of these accounts, and I'm earning a not-insignificant 4% on my PYUSD holdings.

Plans are underway to make PYUSD a bigger part of the PayPal e-commerce experience, as well as part of the PayPal merchant experience. Put another way, it will be easier than ever before to use stablecoins at checkout, or to make stablecoins part of the cash management process at a small business.

All of this, in my opinion, is a huge win for PayPal and may help to explain why PYUSD now has a $2.7 billion market cap.

Ripple's stablecoin

In contrast, the primary use case for RLUSD is making cross-border payments. For example, if you have friends or family living abroad, you can send RLUSD to them. They could then convert that RLUSD into their home currency. Since all of this runs on blockchain rails, it's potentially cheaper, faster, and more efficient than doing the same process via traditional methods, such as Western Union.

However, RLUSD is primarily intended for banks making cross-border payments, not individuals sending money abroad every month. And there's no natural home for RLUSD, as there is for PYUSD. You will need a cryptocurrency wallet to buy and hold RLUSD, and that may present a steep learning curve, especially if you have older family members living outside the United States.

Since Ripple, creator of the RLUSD stablecoin, is also the creator of XRP, the high-risk, high-reward crypto token, the early thinking was that there might be some advantages to holding RLUSD if you were also using XRP for decentralized finance (DeFi).

However, as it stands now, DeFi is still relatively underdeveloped on the XRP blockchain, and I don't see any immediate reason to acquire some RLUSD. From my perspective, it's still better to deploy stablecoins on other blockchains.

And the winner is...

For that reason, the clear winner here is PayPal USD. It is the only stablecoin that I hold outside USDC, and for good reason. It can be easily integrated into any PayPal workflow and comes with the backing of one of the world's top fintech players.

If you are looking to get involved with stablecoins, PayPal USD offers an attractive potential entry point.

Dominic Basulto has positions in PayPal USD, USDC, and XRP. The Motley Fool has positions in and recommends PayPal and XRP. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.