×

Despite $319 to 10 cents flash crash, ethereum still has massive potential, says digital currency expert

  • Ethererum is built on a newer generation of blockchain technology and is optimized for software engineers, says blockchain investor William Mougayar.
  • About 35,000 developers and more than 500 start-ups are developing its platform.
  • Big companies like BP and Microsoft are using it as well.

Ethereum investors shouldn't worry too much about the digital currency's flash crash from $319 to just 10 cents in a matter of seconds, blockchain investor William Mougayar said Friday.

"I wouldn't call it a crash," Mougayar said on CNBC's "Squawk Box" a day after the plunge. "It was more a flash or a blip or maybe a technical error on the exchange that was powering a lot of the transactions."

Like bitcoin, ethereum is a cryptocurrency built on blockchain technology. It trades in digital tokens called ether.

"One could think of ethereum as a newer generation of blockchain," said Mougayar, author of the book "The Business Blockchain."

"One of the differences is ethereum has been optimized for the software engineer, whereas bitcoin was more oriented towards being a cryptocurrency. Ethereum has been really adopted as a software development company, so it's really loved by the developers and programmers out there."

Since ethereum is a new kind of currency, Mougayar understands why the value is so unstable. However, he thinks things will even out and people should invest in bitcoin and ethereum, especially because the gap in value has narrowed between the two.

Because blockchain technology is a relatively new field, there's room for many different currencies, he said, but added that bitcoin and ethereum won't become obsolete.

"Ultimately it's about building a whole ecosystem," he said.

Ethereum has about 35,000 developers worldwide in addition to more than 500 start-ups developing on its platform, Mougayar pointed out. Large companies like Microsoft and BP are using ethereum in different projects. And ethereum has become a source of "cryptocapital" since it is a cryptocurrency.

"This is capital basically almost replacing venture capital," Mougayar said.

WATCH:

Here's what sets Ethereum apart from its rival Bitcoin