Chamath Palihapitiya, the outspoken CEO of Silicon Valley fund Social Capital, recently disclosed that his investment firm has owned bitcoin since 2013. While there are thousands of different cryptocurrencies out there, Chamath has been the most vocal about his support of bitcoin in particular. 

Bitcoin, which came onto the scene in 2009, was the first decentralized peer-to-peer payment network built with no central authority. Think of it as cash for the internet, where no government has any control over supply and there are no middlemen between transactions. 

It's no surprise that something like this has been targeted by law enforcement, scrutinized by business leaders, and received growing interest from investors and the general public alike. Palihapitiya, one of the biggest proponents of this new digital currency, doesn't shy away from voicing his opinions on the subject.

Here are three reasons why he loves bitcoin.

an imagining of physical bitcoin flying around

Image source: Getty Images.

1. It's a hedge against the financial system

With the unprecedented amount of fiscal and monetary stimulus in developed countries since the great financial crisis a decade ago, Palihapitiya views bitcoin as a hedge against massive money printing. Because bitcoin's supply is fixed (there can only be 21 million in circulation), there is no structural risk of a single party devaluing the currency, which is a key differentiator of the cryptocurrency.

As interest rates in many countries remain close to or even below zero for the near future, higher levels of inflation are expected. This means the fiat currency we own will lose value over time, which is not something new. But with record levels of global debt that continues to grow, it seems interest rates will need to stay low to continue allowing governments to function.

How long can massive amounts of borrowing go on? That remains to be seen, so Palihapitiya says to view bitcoin as "schmuck insurance" for global uncertainty. "Our leaders are not as trustworthy and reliable as they used to be," Palihapitiya declared in a recent CNBC interview. Furthermore, his perspective is strengthened by the fact that this cryptocurrency is not really correlated to any other asset.

2. It's electronic, peer-to-peer, and mostly unregulated 

As I previously alluded to, bitcoin is completely electronic, has no intermediaries, and is governed by no one but its users. Just as the TCP/IP protocol laid the foundation for the internet by creating a common way for computers to communicate with each other, Palihapitiya believes bitcoin and cryptocurrency can reduce friction and democratize the transfer of things of value without large financial institutions getting in the way. In other words, it's a way for any type of asset (anything that has value) to all be linked to each other.

Most innovation takes places outside the realm of regulation, and bitcoin is no different. It takes a person as tech-savvy as Palihapitiya to truly understand and appreciate the disruptive properties of cryptocurrency. The lack of a regulatory framework has paved the way for various companies to innovate extensively in the cryptocurrency space, building products and services from traditional banking all the way to business-to-business social networking. 

3. He has a chance to become an expert in this space

As if being a successful venture capital investor wasn't enough, Palihapitiya wants bitcoin to be "one of these four or five things that I now become an expert in again." If he didn't believe in the technology, he wouldn't put in the time and effort needed to become a thought leader and advocate in the space. In addition to owning bitcoin, his firm, Social Capital, has made an investment in cryptocurrency security start-up CryptoMove, giving him a firsthand look at the future products and services that will be vital in the space. 

Bitcoin is slowly gaining traction as a method of payment acceptance for many large companies. In order for it to become a truly global currency that many are betting on, it will need more supporters willing to stick their necks out and promote its merits. Palihapitiya hopes to keep being just that. 

The takeaway for potential investors

Palihapitiya thinks everyone should have 1% of their assets in the cryptocurrency for the reasons outlined above. If it works out and gains worldwide adoption even in some minor form, it can potentially be worth many multiples higher than the current price.

Investors have many options to purchase bitcoin these days, such as from a digital currency exchange like Coinbase, or even in their PayPal or Square Cash App account. Whether you believe in cryptocurrency or not, it no longer can be ignored. Palihapitiya is a big believer, and maybe you should be, too.