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Thinking about buying Bitcoin? I’d buy this FTSE 250 tech stock instead

As the price of cryptocurrency Bitcoin rocketed towards $20,000 in December 2017, debate raged among investors about whether the rally could be sustained or whether the ‘bubble’ was ready to burst at any moment.

And guess what? It was no surprise that in the end, it was the latter group that felt vindicated as the Bitcoin price plummeted in 2018, with the death of the crypto fad being proclaimed by many.

Now, as we head into the summer of 2019, Bitcoin has undergone a resurgence which suggests that it was not just a flash in the pan after all. The price of one Bitcoin has gained more than 79% in the last month and now investors are starting to consider if there really could be further value in the tech phenomenon.

Blockchain

I might not go as far as my Motley Fool colleague Paul Summers who argues that Bitcoin has no intrinsic value, but I see his point and I believe any value that it has is based around the technology behind it rather than the coin itself. The development of blockchain and the potential uses for this technology could transform whole sectors, never mind individual companies.

The problem is with the lack of regulation and corresponding volatility so I would that argue it is unlikely to ever be a safe investment, regardless of an investor’s appetite for risk.

That said, I see plenty of opportunities to invest in tech stocks in the UK’s FTSE 250 index with plenty that have great growth potential.

Softcat

One of those I believe which fit the bill is cybersecurity company Softcat (LSE:SCT), whose share price has gained more than 30% in the last 12 months.

Cybersecurity has become big business in recent years and Softcat has benefited more than most in the sector with revenue booming in the last five years as demand for its services have increased.

In its interim results posted earlier this year, it said it added 620 new customers in the first six months, bringing its total customer list up 6.5%. This was based on continued strong performance from its key growth sectors of Cloud, Security, Software and Services.

In the same set of results, pre-tax profit for the period grew 40.7% to £33.9m, while a recent trading update suggests full-year results will be ahead of initial expectations.

Prominent fund manager Neil Woodford recently sold his Softcat stake as he rejigged his portfolio, and it must be said that a current P/E ratio of 32 may not sound very appealing to many.

However, with demand for cybersecurity and its other software and hardware solutions only set to increase in the coming years, I believe its growth is set to continue so an investment today could mean the P/E drops sharply in the years ahead.

The opening of new offices in Dublin, and more recently Glasgow, signposts the ambition of the board to invest further in its operations and I see little reason why the Softcat share price should suffer any major volatility any time soon. Bitcoin, however… well there really is a recipe for volatility.

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Conor Coyle has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.