The global financial crisis which started in 2008-9, and whose effects we are still feeling deeply despite the fact that the stock markets have been back the ‘boom’ phase of their perennial boom and bust cycle for years, was caused by the banks. It was their irresponsible lending, casino style financial markets, and deceptive derivatives cooked up secretly in back rooms which brought the world’s economy to its knees.

And our response? Central banks printed lots of money and gave it to all of the banks which caused us so many problems in the first place, as if they were being rewarded for what they had done. This new money was not entirely created out of thin air – it was backed by huge amounts of debt which our governments signed off and which we now have to pay. That is why we are facing such huge cuts. This is also how our currency (which is called ‘fiat money’) usually works. New money is created every year based on new debt which we have to pay, and to the profit of the banks which issue it – just not normally in such huge quantities.

Of course many people were angry about this at the time, but few realistic and coherent alternatives existed at the time – we were told that we simply needed a strong banking industry and nothing else could be done. People accepted this. But now an alternative is emerging. An alternative to the fat cat bankers and city traders, and to the central banks and their printing presses.

This alternative is digital currency. Of course Bitcoin is the big player, the original innovation which proved that digital money can work. But now a large number of alternatives are popping up which, rather than just being the play thing of geeks, are specifically aiming to take on the traditional banking industry, the central banks, and the fiat money which they issue. Two notable examples are Ripple ( http://ripple.com) and NoFiatCoin ( http://nofiatcoin.com).

Ripple is actually a protocol which enables any currency to be held in a digital wallet, transferred between people, and exchanged for other currencies. Whilst Bitcoin is a decentralized, peer to peer currency that can be used to buy things, the Ripple protocol is a decentralized and peer to peer financial system which can replace many of the functions provided by banks, from lending to foreign exchange. It comes with its own digital currency called XRP, but can also be used with Bitcoin or any other currency.

Building on top of this protocol NoFiatCoin is creating a digital currency which, instead of being backed by debt obligations which we have to pay, is backed by gold and silver. In a way it is trying to take the advantages of the old gold standard – which we used to have before fiat money – and combining that with the best part of digital currency. It aims to be more stable and secure that other highly volatile digital currencies like Bitcoin because of its gold backing (you can redeem your coins for real gold), and to provide a real alternative to fiat money and ‘banksters’ who caused the financial crisis.

Of course it is too early to tell whether any of these enterprises will succeed. They are sure to face resistance from the established banking industry and the vested interests at the top of the financial system. But just to see the possibility of an alternative which is by the people and for the people makes these exciting times indeed!