Bitcoin's Potential Is Underestimated: Thiel

 As the debate over the growth and legitimacy of bitcoin continues, billionaire serial entrepreneur and investor Peter Thiel has made public his belief that the cryptocurrency​ has a promising future, calling it a “reserve form of money.” (See also: Is Bitcoin on Track to Surpass Apple's Market Cap?)The PayPal Holdings Inc. (PYPLPYPLPayPal Holdings Inc72.33+1.66% ) co-founder spoke on the third day of the Financial Investment Initiative summit in Saudi Arabia, indicating that while he is “skeptical of most cryptocurrencies,” he is bullish on bitcoin. Thiel said that bitcoin critics are “underestimating” the digital currency given its effectiveness as a store of value more than as a means of exchange.“It’s like gold, and its just a store of value. You don’t need to use it to make payments,” said Thiel. “If bitcoin ends up being the cyber equivalent of gold it has a great potential left.”

Harder to Mine Than Gold

The venture capitalist noted that since mining bitcoin is “actually harder” to mine than gold, “in that sense it’s more constrained.” As a result, a limited issuance of 21 million bitcoins will be encoded in the cryptocurrency’s software. Further, bitcoin is based on the “security of the math,” meaning that it can’t be hacked and is secure, said Thiel.Thiel’s remarks come alongside a dip in bitcoin prices this week following a second-hand fork necessary to create another bitcoin offshoot, coincidentally dubbed bitcoin gold. Advocates of bitcoin gold are seeking to further decentralize the bitcoin mining process so to hedge against the risk of volatility from future shocks or manipulation. Earlier this year, JPMorgan Chase & Co. (JPMJPMJPMorgan Chase & Co101.09-0.32% ) Chief Executive Jamie Dimon made headlines by deeming bitcoin a “fraud” and investors in the cryptocurrency “stupid.” Also this week, Saudi billionaire investor Prince Alwaleed bin Talal said he expects bitcoin to “implode.”At a price of $5,789, bitcoin has rallied about 730% this year, versus the S&P 500’s 15.3% gain over the same period. (See also: Bitcoin Price Steady as Analysts Predict $25,000 Target.)