Barter economies are the earliest form of a monetary system in place. A barter economy is an exchange based economy in which goods or services are directly traded for other goods or services. A barter economy also does not have a common form of currency so all trades must take place for other goods or services.
It is a known fact that in recent times, barter economies have assisted in counter acting unemployment, the exploitation of laborers, and economic insecurity. Internet is directly attributed to further spreading barter economic systems.
There are a few limitations with barter economies to be mindful of. In order for the actual barter or trade to occur, the two people involved need to want the goods or services that the other has. This is called a double coincidence of wants and a trade does not occur unless this is present. Next, there is no common measure of value due to the lack of a common currency. The values of goods and services are not as easily measured in a barter economy. If a person does not have enough goods to cover the value of the goods or services that they wish to receive. then a transaction cannot occur. When this happens, it is called the indivisibility of certain goods. There is also a lack of standards for deferred payments. This also refers to the economy’s lack of common currency or value; however, the debt could always be broken up based upon the actual number of units of a product and then eventually used for payment. Finally, there is a difficulty in actually storing wealth. If the economy is based on perishable goods, then it is extremely impractical to store the goods.
Barter exchanges support businesses and consumers in a local economy. It stimulates businesses by transferring the goods or services available for other goods or services with more value because it is not as accessible to the business. Also, you essentially conserve cash and can reduce your use of traditional banking with a lower dependency on the government. Bartering is not as susceptible to inflation either when the values of the goods or services are agreed as equal. Bartering even allows to sell services or goods to customers with little cash flow.
Our software that models a barter economy is called iScripts eSwap. eSwap allows you to sell or swap various items. eSwap can be used to establish niche markets and has been effective in trading rare goods. You can try the iScripts eSwap live demo at Demo page