During a panel session at the Open Compute Summit Jan. 29 in San Jose, Calif., celebrated Internet browser pioneer turned venture capitalist Marc Andreessen explained why he's bullish on the Bitcoin cryptocurrency. Andreessen's enthusiasm is about the technology itself as well as the hardware that will need to support it.

New Bitcoins are created by way of a compute-intensive process known as mining.

"Bitcoin mining is the heart of Bitcoin, which is all the computation that is done to maintain the trust network," Andreessen said. "The press reports on mining as a waste of time, but in reality it's all the proof of work computation that makes a distributed trust network work."

Andreessen said that, in the long run, a distributed system such as Bitcoin is certainly an alternative if not an outright replacement to centralized entities like banks and stock exchanges.

"There is a very big thing going on now with mining that we're in the very early stages of," Andreessen said.

Efforts to improve Bitcoin mining are now under way, working under the basic assumption that the cheaper you can mine Bitcoins, the more money you can make. Andreessen said that at his venture capital firm, Andreessen Horowitz, he is seeing business pitches for Bitcoin-optimized data centers.

The Bitcoin phenomenon is resulting in chip design innovation as well.

"There is a big opportunity to apply custom silicon to mining," Andreessen said. "We're seeing a new wave of chip design around it, which is not something I would have predicted a year ago."

While mining operations can potentially be done on general-purpose chips, Andreessen stressed that Bitcoin mining is much more efficient on custom, specialized silicon.

"Mining is a very specific thing that you can highly parallelize," he said. "So I think that custom mining chips will dominate for quite a while."

Overall, Andreessen said that Bitcoin, and the idea of cryptocurrency in general, is the first thing that is like the Internet since the Internet itself was born.

"Cryptocurrency, and Bitcoin specifically, is the first practical way for people to do business over the Internet with no prior relationship and no central hub or trust authority," Andreessen said. "All e-commerce and payments up until now have had to run through some kind of central authority."

The potential for disruption is massive in Andreessen's view, given the volume of transactions that take place daily. He noted that there is a large range of industries that exist today to service the payment ecosystem and transactions.

"So now there is a better Internet-based way to do those things, and it seems like a very, very big opportunity," Andreessen said. "Therefore as a consequence, the amount of hardware and innovation that is put behind it is going to be gigantic."

Sean Michael Kerner is a senior editor at eWEEK and InternetNews.com. Follow him on Twitter @TechJournalist.