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By William Farrington At Proactive Investors For This Is Money 13:49 17 Apr 2023, updated 17:17 17 Apr 2023

Those of you with eyes on the markets will know that the best-performing asset class of 2023 has not been equities, real estate, bonds or gold, but bitcoin, the world's first and largest cryptocurrency borne from the ashes of the 2008 global financial crisis.

Bitcoin was originally conceived by pseudonymous developer Satoshi Nakamoto as a decentralised payment network without the need for a third-party financial institution.

While bitcoin has failed to cement itself as a genuine cross-border payment network primarily due to prohibitive transaction charges and sluggish transaction speeds the digital currency has been rebranded by its evangelists as a sort of inflation hedge, an alternative store of value with a finite circulating supply that is impossible to be diluted.

So it comes as no surprise that since the start of 2023, bitcoin's spot price has skyrocketed over 80 per cent, surging past $30,000 earlier this month for the first time in nine months.

Financial analysts and Twitter handles will continue to lock horns over the credibility of the so-called 'digital gold', but for the investor seeking to diversify their portfolio without the technical hassles of managing crypto wallets and untrustworthy crypto exchanges, what is the best way to gain exposure?

For physical gold, the answer is easy: The London Stock Exchange is a global hub for small-cap gold exploration and production groups; Shanta Gold, Caledonia Mining, Greatland Gold and Ariana Resources to name a few.

Though far less developed, there is also a burgeoning bitcoin mining segment at the lower end of the London capital markets.

Bitcoin miners use long rows of specialised computers to solve complex equations that help the bitcoin network run, receiving newly minted bitcoins in return. This makes start-up costs high, but margins tend to also be high once operations get up and running.

Argo Blockchain (12.75p), saved by the sale of its Texas-based Helios bitcoin-mining facility to Galaxy Digital, is the most established name (its 78 per cent year-to-date performance underscores perfectly how bitcoin miners reflect the market price of bitcoin).

There is also Quantum Blockchain (1.58p), the AIM-quoted group with an interest in the arcane world of quantum computing.

Chief executive and Italian theoretical physicist Francesco Gardin leads a research and development team trying to develop a new way of mining bitcoin using proprietary algorithms to give miners a competitive edge.

These companies are as risky as the cryptocurrency underpinning their operations, though there will soon be another route to bitcoin exposure.

The London Stock Exchange Group has just teamed up with digital asset derivates platform Global Futures and Options (GFO-X) to bring regulated bitcoin futures and options products to UK investors for the first time ever.

Paris-based clearing house LCH, which is owned by the London Stock Exchange Group, will facilitate the transactions via a new, segregated service called DigitalAssetClear.

GFO-X called it 'the first steps to extracting efficiencies from new technologies within a traditional market structure, with the goal over time of delivering 24/7 trading to global regulated digital asset markets'.

DigitalAssetClear will bring bitcoin derivatives products into the regulated market a year after the Financial Conduct Authority prohibited Binance, Coinbase and other trading platforms from offering them.

The partnership also offers a glimpse of prime minister Rishi Sunak's plans to make the UK a 'global crypto hub'.

All things considered, the options for UK retail investors seeking alternative exposure to bitcoin prices are objectively limited, albeit growing.

But if bitcoin prices sustain the rapid momentum we have seen in the latest calendar year, there is a good chance that we'll see more miners, innovators and derivatives platforms coming to the public markets.

London could be particularly well-placed to draw IPO interest, if, as is the generally accepted case, bitcoin is treated as a commodity in a similar vein to physical gold rather than a tech-adjacent security.

The other fundamental question each person must ask themselves is: Should I risk an investment?

The numerous controversies over the past 12 months, from the dramatic collapses of Three Arrows Capital and FTX to the more recent closures of crypto-focused US banks Signature and Silvergate, have besmirched the reputation of crypto as a respectable asset class, but bitcoin sits apart from the Wild West that is decentralised finance, NFTs and others.

Unlike gold, bitcoin has no intrinsic value and it certainly does not earn a yield in the way a security does, but that has not stopped institutional adoption from ploughing ahead, whether that's commission-free trading offered by Fidelity or BlackRock launching a private bitcoin trust to US clients.

The message remains as always, do your research , keep your wits sharp and there will be opportunities.

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SMALL CAP IDEAS: Where can UK investors find alternative exposure to bitcoin? - This is Money