FIAT CURRENCY COLLAPSE - People Seeking Alternative Currencies. BITCOIN & ALT CURRENCY on The Rise

An alternative currency (or private currency) is any currency used as an alternative to the dominant national or multinational currency systems (usually referred to as national or fiat money). They are created by an individual, corporation, or organization, they can be created by national, state, or local governments, or they can arise naturally as people begin to use a certain commodity as a currency. Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency.




When used in combination with or when designed to work in combination with national or multinational fiat currencies they can be referred to as complementary currency. Most complementary currencies are also local currencies and are limited to a certain region.

Barters are another type of alternative currency. These are actually exchange systems, which only trade items; thus without the use of any currency whatsoever. Finally, LETS is a special form of barter which trades points for items. One point stands for one man-hour of work.

Often there are issues related to paying tax. Some alternative currencies are considered tax-exempt, but most of them are fully taxed as if they were national currency, with the caveat that the tax must be paid in the national currency. The legality and tax-status of alternative currencies varies widely from country to country; some systems in use in some countries would be illegal in others.



For all the regulatory crackdowns on bitcoin in recent weeks, the crypto-currency's advocates remain unfailingly optimistic.

Bitcoin, they say, heralds a future where private and stateless currencies will dethrone the dollar and other monetary dinosaurs.

But if you strip away its technological trappings such as the encryption and peer-to-peer networks, bitcoin in fact closely resembles earlier private currencies which circulated alongside government-sponsored money.



This was particularly true of the sorts of coins that served as small change for the lower classes of society. According to monetary historian Eric Helleiner, merchants in England issued low-denomination coins made out of copper, lead and tin from the 13th century onwards.

Private currencies got a further boost during the industrial revolution, when British factory owners became so desperate for small change to pay wages that they minted their own cash in far greater quantities and at a cheaper price than the government itself could muster. Much of this currency consisted of coins made of copper, or occasionally silver, but by the nineteenth century private paper currencies also became common.

By the eve of the American civil war, at least 10,000 different kinds of notes competed with the coins issued by the US Mint.

In most nations, foreign coins often circulated alongside official coins, sometimes supplanting them. The most famous of these interlopers, the Spanish peso or silver piece of eight, was the de facto currency in America.

The creation of central banks gave nation-states even further control over their currency. Even the design of the nation's money, argues Helleiner, came to be seen as a means of instilling allegiance to the state, with nationalist imagery becoming commonplace on currency at this time.

Appearing on CNBC yesterday, former Congressman Ron Paul warned that if the US continues on its current course, the dollar will collapse, and gold will literally be priceless.

"Eventually, if we're not careful, it will go to infinity, because the dollar will collapse totally," Paul said on CNBC.com's Futures Now