Better Crypto Buy Right Now: Ethereum vs. Solana

As investors allocate less of their capital to digital assets amid the current cryptocurrency bear market, both Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL) are getting hit hard. The former is 51% below its record (as of April 13), while the latter is trading 67% off its peak. Shrewd investors might take this weakness as a signal to take a closer look.

Between these leading cryptocurrencies, which is the better buy right now?

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Looking at past performance

Since their respective launch dates (Ethereum in 2025 and Solana in 2020), both digital assets have performed exceptionally well. In the past five years, though, it has been two different stories.

Ethereum investors would've lost 10% of their initial starting capital had they bought five years ago. Solana investors fared much better. Since mid-April 2021, this token's price has shot up 186%.

Look at the past 12 months, and the narrative changes. Ethereum's trailing-one-year gain of 33% runs circles around Solana's 38% drop.

Of course, no one knows what the future will bring, but it's clear that these two cryptocurrencies will remain extremely volatile.

Ethereum dominates adoption, but Solana's speed is impressive

Ethereum was the first blockchain launched that had functionality for smart contracts. This first-mover advantage has pushed its market cap to $286 billion, nearly six times more than Solana's $49 billion. This means the former naturally has much deeper liquidity and a stronger network effect, as the ecosystem surrounding it is more robust.

According to Electric Capital, there are 3,443 full-time developers working on Ethereum today. This is a key data point that demonstrates the potential for greater innovation. Solana's developer community of 1,071, while still sizable, doesn't come close to Ethereum.

Consequently, Ethereum dominates the market for decentralized applications, with more than 5,200. It's a leader for stablecoin issuance, the hottest trend in finance, with 53% of the market. Fintech powerhouse SoFi Technologies launched its stablecoin, SoFiUSD, directly on the Ethereum blockchain.

Solana is no slouch, though. While its history of occasional network outages can be worrisome, its speed is tremendous. The blockchain currently handles 2,900 transactions per second (TPS), significantly faster than Ethereum's 30 TPS. This setup, along with extremely low transaction fees, makes Solana particularly interesting in decentralized finance.

Indeed, Solana can make progress in the payments landscape. Its Solana Pay solution, offering merchants instant settlement and near-zero fees, is compatible with Shopify. And Western Union just announced its stablecoin, USDPT, will be on the Solana blockchain.

If we try to envision what the cryptocurrency industry looks like five or 10 years from now, a valuable exercise, both Ethereum and Solana are poised to sit at the top of the leaderboard. This belief comes from how relevant they are today and how much excitement there is about their potential.

How much risk are you willing to take?

To set the right backdrop, investors should understand that buying a cryptocurrency involves more risk than adding a traditional stock to their portfolio. But zooming in on the digital asset market, there are even different levels of risk. Some cryptos are more proven than others, while emerging blockchains provide more upside potential.

With that being said, Ethereum is the better choice for risk-averse cryptocurrency investors. It's more than a decade old, has a deep developer ecosystem, and has commanded more trust in the community. It's difficult to see it give up its position as the leading blockchain for smart contracts and decentralized apps.

On the other hand, Solana, which is much smaller, has more room for capital appreciation. It can be viewed similarly to a growth stock in the world of crypto. Given its impressive advantage in terms of speed, it's also an exciting opportunity for investors comfortable with more uncertainty and willing to take on greater risk.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ethereum, Shopify, and Solana. The Motley Fool has a disclosure policy.