The value of all cryptocurrencies in circulation soared to a new high of $3.9 trillion in December, shortly after Donald Trump won the presidential election on Nov. 5. Since Trump campaigned on a pro-crypto agenda, investors immediately started pricing in the potential of friendlier government policies and lighter regulation, which could create value across the industry.
XRP (CRYPTO: XRP), which was created by a company called Ripple in 2012, was one of the best performers last year with a whopping 235% gain. Bitcoin (CRYPTO: BTC) also logged an impressive return of 119%, further solidifying its position as the world’s largest cryptocurrency.
But 2025 is off to a rocky start for both. Although XRP is up slightly on the year, it’s down 32% from its 52-week high from January. Bitcoin, on the other hand, has started the year with a decline of 14%. For investors who believe in the potential of cryptocurrencies, the recent dips might spell an opportunity — but is XRP or Bitcoin the better buy this year?
Sending money across borders can be slow and expensive. Networks like SWIFT (Society for Worldwide Interbank Financial Communication) were established to help global banks communicate with one another and settle transactions more quickly, but not every financial institution is on board, so there isn’t a holistic solution just yet.
Ripple created the Ripple Payments network to tackle that problem. It facilitates direct communication between banks no matter what infrastructure they use, so they can settle transactions with one another in seconds rather than days.
Ripple created the XRP token to standardize those transactions. For instance, an American bank can convert U.S. dollars to XRP tokens, and then send those tokens to a Japanese bank, eliminating currency exchange fees and other transaction costs (it only costs 0.00001 XRP per transaction, or $0.000023 at the current price, so a minuscule fraction of one cent).
Ripple ran into significant regulatory issues back in 2020, and it was sued by the U.S. Securities and Exchange Commission (SEC). Since Ripple controls 42 billion of XRP’s total supply of 100 billion tokens, and releases them gradually to meet demand, the SEC believed the crypto should be classified as a financial security (like a stock or a bond). If the SEC won in court, Ripple would have been forced to abide by a strict set of regulations, severely disrupting its business.
The case was mostly resolved last August when a judge fined Ripple $125 million, and ruled XRP is only a security in specific circumstances like when it’s issued to institutions. However, it might not be a security when used in transactions or traded on crypto exchanges, a ruling that investors viewed as a win. The SEC appealed the decision, but there is growing speculation the case could be withdrawn.
