LinkedIn founder and chairman Reid Hoffman told CNBC he remains a believer in bitcoin, but he says the digital currency is only in the first inning and it is not for everybody.

"The advice I give my friends is don't buy any bitcoin that you wouldn't be comfortable losing, rather like a seed investment in a technology company," he said Thursday during a "Squawk Box" interview from the World Economic Forum in Davos.

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Hoffman, who owns bitcoin and invests in two bitcoin companies, said the least interesting part of the digital currency is its trading price, which has been volatile.

Bitcoin as a platform for machine-to-machine transactions is where the real value lies, he said.

"As you think of your car becoming a software vehicle, it could automatically handle parking, bridge tolls, all the rest of it if it had a machine-to-machine currency," he said.

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The currency also holds the potential to bank the un-banked in markets where it is too expensive for the banking system to support digital transactions, he said.

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Bitcoin investor's warning on bitcoin