Peter Schiff is a famous gold proponent and investor, and more recently he has become known for his hatred of bitcoin.That is why it may seem odd that Schiff's Euro Pacific Precious Metals has announced that it is pairing with bitcoin payment processor BitPay in order to allow investors to buy gold and silver through Euro Pacific by using the digital currency.In a November 2013 appearance on CNBC's "Futures Now," Schiff, chairman of Euro Pacific, declared that bitcoin was in a bubble that resembles "modern-day tulip mania."He added that "I don't think it's going to end up being a source of commerce for the world."Read More Bitcoin is tulip mania 2.0—not gold 2.0: Schiff On Wednesday, BitPay announced that it was partnering with Euro Pacific in an arrangement that will allow customers to spend bitcoin in exchange for precious metals.But Schiff maintains that there has been no change in his thinking."I haven't changed my views.I still think that there is a bubble in bitcoin, and I don't think that we've seen the lows yet," Schiff said on Thursday's Futures Now.

For that very reason, "I certainly want people who own bitcoins to buy precious metals, which I see as a much more secure and reliable source of value."To be sure, the partnership does not mean that Euro Pacific is taking any direct position in bitcoin.BitPay converts the bitcoins from customers into the U.S.dollars in which Euro Pacific will be paid."By partnering up with BitPay, I'm not actually accepting bitcoins," Schiff said."It's just that if you do have bitcoins, you can make the exchange using BitPay.You give BitPay your bitcoins, they'll turn around and give me dollars, and then I'll ship you your gold."But it's more than a mere marriage of convenience.For Schiff, bitcoin investors make for natural gold investors."The people who have bitcoins, they're worried about central banks, they're worried about fiat currency, they're worried about inflation, and so they bought bitcoins to protect themselves.I think it's a very fertile market for precious metals.I think somebody who's already worried about these things is more likely to want to buy gold than someone who doesn't have any bitcoins."

That's why it could make a good deal of sense for Euro Pacific to pair with BitPay."Why wouldn't I want people who have bitcoins to be able to use their bitcoins to buy gold or silver through my precious metals company?I mean, it doesn't cost me anything to pair up with [BitPay] so there's no downside to me.Maybe I get some extra business, and maybe some people preserve their gains," Schiff said.Still, there could be a risk that Schiff's well-known antipathy to bitcoin turns off the digital currency community./r/Bitcoin was flooded with comments like "is this the same peter schiff that was bad mouthing bitcoin a few months back" and "LOL!By Thursday, an image of Samuel L. Jackson from Pulp Fiction appeared on the forum, where instead of threatening "Say what again!"the caption read "Say Peter Schiff again!"Read MoreDoomsayers Nouriel Roubini and Peter Schiff in war of words Yet Michael Finger, director of marketing at Euro Pacific Precious Metals, is optimistic."What we hope from the bitcoin community is that they will view this in practical terms," Finger said.

"We're the first major gold dealer to accept bitcoin.And Peter's thoughts aside, this is just a very practical opportunity."—By CNBC's Alex Rosenberg.Ever since President Nixon broke the US dollar's last link to gold, the world has been set adrift on a sea of fiat currencies that have been increasingly debased, serving the interests of governments and financial elites.For the last five years, central banks have imposed near-zero rates of interest that have helped push up stock, bond, and real estate prices, but have made it nearly impossible for savers to receive meaningful returns on bank deposits.bitcoin donation platformTo make matters worse, the apparatus of national security has turned financial transactions into a massive exercise in government surveillance.buy bitcoin using payzaUnder the camouflage of 'protective' measures, such as the USA PATRIOT Act, governments have invaded the privacy of citizens and compromised banking secrecy in an unprecedented and often unconstitutional manner.bitcoin verify transactions

Despite huge potential transaction-cost reductions achievable through advances in digital technology, banks continue to charge exorbitant transaction fees while maintaining transfer delays that reflect a pre-digital age.In addition, bank regulators, led by the IMF, have shown a willingness, in the case of Cyprus, to make depositors liable for poor banking decisions.Many private citizens may naturally see the status quo as a deliberate policy to crush middle-class savers and pave the way for centralized socialism.bitcoin crash april 2011Some have sought a way out.avalon ii bitcoinTraditionally, investors have turned to precious metals such as gold to help protect and privately transfer their wealth.bitcoin heraldHowever, ever-increasing regulation, monitoring, and physical searches have eroded some of the key protections afforded by gold.bitcoin blockchain nodes

Gold's weakness over the past 24 months has also spooked many former adherents.In such an environment, many have seen the recent arrival of digital crypto-currencies as the means to restore the monetary independence that has been co-opted by big governments.Currencies like the now-famous Bitcoin offer the potential for a store of value, low transaction costs, free movement, and anonymity.It's no wonder that Bitcoin has taken the world by storm.bitcoin airdropBut all that glitters is not gold.bitcoin euro historicalWikipedia defines a crypto-currency as, "a peer-to-peer, decentralized, digital currency [or medium of exchange] whose implementation relies on the principles of cryptology to validate the transaction and the generation of the currency itself."In short, it is a virtual currency traded by private, unregulated internet exchanges.Despite the recent fame of Bitcoin, there are actually a number of other crypto-currencies that have been created in recent years.

Names include Litecoin, Peercoin, Namecoin, and Primecoin.Bitcoin, established in 2009, is undoubtedly the most successful, and it became a breakout news story in 2013.Bitcoin offers a few distinct advantages over conventional currencies: it allows almost instantaneous peer-to-peer transactions that completely avoid the expensive and cumbersome bank-run electronic payment systems, and it allows for fast international movement of funds outside foreign exchange controls.Many investors are also betting that Bitcoin will offer a better store of value over time than serially printed fiat currencies.That's because the Bitcoin protocol automatically, and apparently irrevocably, limits the number of bitcoins that will be created to 21 million.In this sense, they are immeasurably more honest than US dollars.However, unlike US dollars, pounds sterling, or euros, bitcoins do not carry legal tender status, but rather rely on the network of merchants and individuals to continue to accept them as payment for goods and services.

Finally, by utilizing anonymous wallets, some users may think that crypto-currencies like Bitcoin offer increased financial privacy.I believe that this is largely an illusion.Governments have shown a great ability to crack any code no matter how well planned (just look at the British government's success against the Germans in the Second World War).I have full faith that the US Federal government can, over time, develop techniques to map all cyber transactions.A Volatile Elephant in the Room But it is Bitcoin's volatility that will likely be its immediate undoing.In recent months, as more speculators have moved into the market, prices have been unstable to say the least.On November 29th, Bitcoin reached $1,242 in Tokyo just as gold dipped to $1,240 an ounce.When those two values crossed, many began to speculate that Bitcoin had replaced gold as the premier alternative to fiat money.With relatively high transaction costs and delivery delays, precious metals are expensive to store and transport.

In contrast, Bitcoin transactions are fast, cheap, and transnational.But little, if any, store of value is offered.That reality has been demonstrated in recent weeks as Bitcoin has dropped by some 50 percent in market value.While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.Nevertheless, the advent of crypto-currencies represents the increasing popular demand for a currency insulated from political debasement and bank profiteering.Crypto-currencies represent a legitimate attempt by private citizens to reassert their sovereignty over such government actions.I appreciate the effort, and I believe it holds much promise.But for now, I will stay with the traditional store of value, gold.John Browne is a Senior Economic Consultant to Euro Pacific Capital.Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital, or its CEO, Peter Schiff.