Dan Morehead, chairman of digital currency exchange Bitstamp, said bitcoin and other digital currencies will likely become assets serious investors will want in their portfolios.

"Bitcoin's essentially going to revolutionize currency, or money," Morehead said on Wednesday at the Sohn Investment Conference in San Francisco, which was attended by portfolio managers and asset allocators.

"If it does work, the upside is so high, it's a rational, expected thing to have in your portfolio," he said.

Bitcoin is "going to disrupt money just like voice-over IP" took away the dominance of giant telecommunications companies on communication, he said. VOIP, or voice over internet protocol, is the technology that allows real-time voice calls over the internet.

The blockchain technology behind bitcoin has led to the development of many other digital currencies, such as ethereum and litecoin.

Morehead said he considered those blockchain-based tokens to be protocols, a system of rules similar to HTTP and others that enable the internet to exist as it does today.

Right now, those protocols may run the internet, but most of the profits are going instead to the applications, such as Google's Gmail, which are built on top of those protocols.

In contrast, Morehead said that in a blockchain-based world, the protocols such as bitcoin take 95 percent of the earnings, while the "application," such as the digital currency exchanges, take a smaller share of the profits.

"Only a tiny bit is in the companies," he said, pointing out that cryptocurrency exchange Coinbase only has a valuation of about $1.5 billion, compared with bitcoin's more than $70 billion market capitalization.

That has a "very interesting implication for investing," Morehead said.

About 13 percent of bitcoin-U.S. dollar trading volume took place on Bitstamp Wednesday, according to digital currency data website CryptoCompare.

Morehead also founded Pantera Capital, a blockchain investment firm and one of the largest institutional owners of bitcoin, according to its website.

Wednesday's event is the West Coast version of a New York-style investment conference, which are best known for hedge fund managers making market-moving presentations.

The Sohn conferences benefit pediatric cancer and other causes for underserved youth. The conference was presented in partnership with CNBC.

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