Bitcoin bull unfazed by cyberattacks – Philly.com

Michael Novogratz says cryptocurrencies could be worth more than $5 trillion in five years - if the industry can come out of the shadows.

"The Nasdaq got to $5.4 trillion in 1999, why couldn't it be as big?" the former hedge fund manager said in an interview. "There's so much human capital and real money being poured into the space, and we're at the takeoff point."

To get there, though, companies need to develop sound business principles to satisfy regulators and lend legitimacy to the budding industry, one of Wall Street's biggest bitcoin bulls said Tuesday at the CB Insights Future of Fintech conference in New York.

That's proving an uphill battle amid bitcoins' growing reputation as a currency favored by black marketeers and hackers. The industry took another reputational hit Tuesday after a cyberattack spread around the world, disabling computers and demanding users pay $300 in cryptocurrency to unlock them. It follows the WannaCry hack in May.

While bitcoin was little changed at $2,379.62 as of 4 p.m. in New York, some chipmakers whose products are used in mining the cryptocurrency also retreated. The PureFunds ISE Cyber Security ETF, known as Hack, erased earlier gains to trade little changed.

Bitcoin, the biggest cryptocurrency, is up more than 140 percent this year, and ethereum, the digital asset based on the ethereum blockchain, has surged to about $240 from just $8 at the beginning of the year. The cyberattack comes after questions about the sustainability of this year's rally and the scalability of the digital assets had already been dragging down prices.

The recent sell-off has shrunk cryptocurrencies' total market cap to about $90 billion from a high of more than $110 billion, according to Coinmarketcap.com.

Novogratz said he took some profits on his bitcoin and ethereum holdings as prices surged, but still has 10 percent of his net worth invested in the sector, including blockchain-based assets he bought in fund-raising mechanisms known as initial coin offerings. He is looking to add more ethereum if it falls between $200 and $150, and more bitcoin if it falls to $2,000.

Bitcoin could become a viable store of wealth, similar to gold, while ethereum could be the platform underpinning the Googles and Facebooks of the future, while money transfers to securities settlement will probably be done using blockchain technology, he said.

Novogratz, who has spoken about investments in bitcoin since 2013 and formerly managed Fortress Investment Group LLC's liquid strategies business, has been one of the most prominent supporters of cryptocurrencies on Wall Street.

Companies need to develop sound business principles to satisfy regulators and lend legitimacy to the budding industry, he said.

"Pay your taxes, because nobody in that space pays taxes. It's a bunch of libertarians," he said, adding he thought a core group of developers have good intentions. "There really is a revolutionary spirit among the guys that are building this system."

Bloomberg's Alexandria Arnold contributed to this article.

Published: June 28, 2017 3:01 AM EDT

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Bitcoin bull unfazed by cyberattacks - Philly.com