What's More Likely to Turn $1,000 Into $10,000: Ethereum or Dogecoin?

To many investors, the question of whether Ethereum (CRYPTO: ETH) or Dogecoin (CRYPTO: DOGE) is more likely to turn an investment of $1,000 into $10,000 has an obvious (and wrong) answer. Many assume that the unpredictable skyrocketing of the dog-themed meme coin is the only way to capture the kind of growth that makes an investment grow 10-fold in value.

Learning which of these two coins is the better option for long-term wealth-building is something that every investor should do. Here's how to approach this issue and why there's only one right answer here.

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Ethereum's problems can be fixed eventually

Most people know Ethereum as the chain with a huge ecosystem of decentralized finance (DeFi) projects, along with a few meme coins, non-fungible token (NFT) markets, and a plethora of other projects. It's also the second-largest cryptocurrency behind Bitcoin, which means that it has quite a lot of momentum, not to mention a market cap of almost $300 billion.

Newer tokens hosted on its blockchain include infrastructure projects for artificial intelligence (AI), as well as some AI agents themselves, which could be major drivers for growth over the medium term and perhaps beyond. When it comes to the number of developers working on the chain, as well as the amount of capital that's available to fund ambitious new projects, Ethereum is somewhere between difficult and impossible to beat.

Alas, most cryptocurrency fans also know Ethereum as the blockchain that's consistently hampered by high gas (user) fees, slow transaction times, and, most recently, as being the home of a crypto exchange that suffered a hack resulting in it losing $1.5 billion. Its leadership, a nonprofit organization called the Ethereum Foundation, is currently in a state of reorganization, which could eventually help to address some of its long-running technical issues.

But does any of this make it a good investment?

If you had invested $1,000 in Ethereum five years ago, today you'd have just over $11,000. Therefore in principle this asset is capable of experiencing the scale of growth that we're looking for here. And, despite its struggles, it's reasonable to bet on this chain being around for the long term, as it's such a central pillar of the crypto sector that a total wipeout is almost impossible to imagine.

Betting on Dogecoin might feel good, but it probably won't work

Let's handle a difficult thought to get it out of the way.

If you had invested $1,000 in Dogecoin five years ago, you would have nearly $89,000 today. That's a lot of money and an amazing return. But the idea that you could replicate this same investment if you did it today is bunk. Here's why.

What are the factors that created the speculative frenzy that sent Dogecoin's price flying during the past year or so? The explanation for the coin's speculative boom in 2021, namely the presence of strong fiscal stimulus, a semi-captive audience of investors sheltering from the pandemic, and historically loose monetary policy, is certainly not the case this time around. Perhaps the cryptocurrency bull market deserves the credit.

But that's of no use for investors looking forward. Remember, for your Dogecoin investment to deliver a 10-fold gain, you can't simply hope for it to behave the same as it did in the past. You need to articulate an investment thesis for why it will be worth much more tomorrow than it is worth today.

That's a difficult task, considering that it's a meme coin. There aren't any drivers of value generation in its repertoire, nor is there a leadership team that could guide it toward creating such drivers in the future. There's only the ability for investors to pay more or less attention to it based on its short-term price action, which could in turn encourage them to buy it to assuage their fear of missing out (FOMO).

So the coin is uninvestable for serious investors. And without a clear concept for how it could actually turn $1,000 into $10,000 during the next few years, there's no contest here.

Ethereum is the investment that's more likely to help your money to grow, even if it might take a very long time for it to increase your holdings 10-fold. Even if it's imperfectly led and imperfectly implemented technically, the chain can react to new developments, increase its capabilities, and generally gain in value by virtue of work being performed by management as well as the many developers in its ecosystem. Dogecoin simply can't do any of that.

Should you invest $1,000 in Ethereum right now?

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