Cryptocurrencies will replace 'some or all' paper money, investor James Altucher says

Bitcoin is on track to become a "valid," "real" investment vehicle to hold in a portfolio — not a game for day-traders, according to advocate James Altucher.

"Bitcoin is not a penny stock — it's not something you buy one day and sell the next day for little gains. You have to be a long-term believer that cryptocurrencies solve huge problems that paper currencies have. Cryptocurrencies will replace some or all paper currencies in the long run," Altucher told CNBC's "Squawk Alley" on Wednesday. "Institutions aren't yet in bitcoin, but they will be ... we are in inning 0 of this asset class."

Bitcoin bulls have praised it as a decentralized option for payments that's not tied to a nation's government. But that doesn't mean that it should be immune to regulation, Altucher said — since "98 percent of cryptocurrencies are scams or frauds."

"More regulation will happen, and that's a good thing," Altucher said. "I don't think regulation will create downward pressure if it allows the 300 million people in the U.S. who don't own bitcoin to say, 'Oh, I need exposure to this asset class.'"

Tech investor Jillian Manus of Structure Capital told CNBC on Tuesday that some cryptocurrency trends, like initial coin offerings, could be a "very dangerous," like "the Wild West without a sheriff." But she, like Altucher, praised more innovative uses of the underlying technologies.

Altucher said that he owns bitcoin and plans to continue buying tokens of the decentralized digital payment platform. While the price of bitcoin listed in Coinbase was down about 13 percent on Wednesday, he noted the dip could be a buying opportunity.

Not everyone is so optimistic. Wells Fargo Securities' Christopher Harvey told CNBC this week that the cryptocurrency market was "froth"-y, and a sell-off was not a matter of if, but when.

But Altucher speculated that as regulation clears up the ambiguity in bitcoin, more investors will feel comfortable buying it.

"This is a global phenomenon," Altucher said.