Social Capital's Palihapitiya says bitcoin is going to $1 million in the next 20 years

• Palihapitiya was one of the biggest early investors in bitcoin. He initially bought the cryptocurrency at about $100.
• "I think this thing is a $100,000 a coin probably in the next three to four years. And I think it is in the next 20 years a million dollars a coin," he tells CNBC.

Chamath Palihapitiya, who first bought bitcoin years ago at an average price of about $100, still believes the cryptocurrency has much further to go despite the monster rally this year.

"I think this thing is a $100,000 a coin probably in the next three to four years. And I think it is in the next 20 years a million dollars a coin," he said in an interview Tuesday with CNBC's "Squawk Box."

The venture capitalist said he and two other friends in Silicon Valley at one point in 2013 owned 5 percent of the entire float of bitcoin. His initial dollar cost average for his investment in the digital currency was $100 a coin. He did sell some on the move higher.

Palihapitiya still thinks investors should put 1 percent of their net worth in the cryptocurrency.

"This is now a confidence game. There is no real utility in this. This is a fantastic fundamental hedge and store of value against autocratic regimes and banking infrastructure that we know is corrosive to how the world needs to work properly," Palihapitiya said. "You cannot have central banks infinitely printing currency."

Palihapitiya is founder and CEO of Social Capital. He was a former member of the senior executive team at Facebook. His firm has $2.6 billion of assets under management. The investor is also co-owner of the Golden State Warriors basketball franchise.

Bitcoin is up more than 2,000 percent in the last year and now trades above $16,000. Bitcoin futures trading launched this week on the Cboe exchange, gaining more than 19 percent Monday in the first full day of trading.

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