Srading.com

Menu
  • Home
  • Markets
    • Forex
    • Stock
  • Fundamental Analysis
    • Economics
    • Money & Banking
  • Technical Analysis
    • Drawing Tools
    • Chart Patterns
  • Tools
    • Online Charts
    • Economic Calendar
    • Interest Rate Today (Live Widget)
    • Forex Market Hours
    • Currency Indexes Chart
    • National Holiday Calendar
    • CoT Chart
    • Quotes

RISK WARNING: Trding financial assets come with a high risk of losing money. So, everything you read on this website is for educational purposes or personal opinions only

Read our DISCLAIMER
Home
Fundamental Analysis
Economics
What Is Bartering? Its Drawbacks & Gold as Money
Economics

What Is Bartering? Its Drawbacks & Gold as Money

October 23, 2022 Zafari

Bartering is trading goods and services without using money as a medium of exchange. 

In other words, bartering is a cashless trading system in which, instead of money traders exchange goods and services. In other words, there were no money supply and money demand.

bartering is a cashless system of trade in which goods and services are exchanged for goods and services

At the beginning of civilization, money didn’t exist, and people were bartering. An example of bartering is the exchange of one sheep for multiple chickens.

Early in history, people lived in small communities. They had land to grow food and animals to consume milk and meat. And, they did not have a forex or stock market.

If individuals lived in one community, bartering was not challenging. However, there were goods that people needed, and they did not have them. For example, every community did not have salt. So, they needed to trade with other communities.

Trading was difficult. Traders needed to transport one commodity from one region to another to exchange for other goods. 

This article explains those difficulties.

Four Disadvantages of Bartering

1. Multiple Prices of Goods and Services

Everything’s worth is different and has different prices. For instance, a sheep is worth more than a chicken. Even one sheep can be worth more than another sheep.

If there was a small number of goods and services, it was easier, but when the number increases so do the problems of exchange or bartering.

2. Double Coincidence of Wants

It is hard to find someone who needs our product, and we need his product. For example, if we have a horse and need chickens, it is difficult to find someone who has enough chickens and simultaneously demands a horse. Even if we find a chicken owner, negotiation is not easy.

3. Divisibility 

Divisibility means dividing into parts. It was a problem. For example, someone may need meat but not a whole camel. No one will be ready to exchange half of his camel for something else because he may not be able to sell the rest to another one who needs half a camel.

Due to the above issues, there was a need for a medium of exchange. It was important for marketing because not everyone could exchange his commodity for another.

4. Transportation 

The difficulty of transportation is also one of the disadvantages of bartering. Shipping is costly, risky, and time-consuming.

Support that the USA and China are bartering. The cost, risk, and time required to trade will double immediately.

Transportation also carries the risk of theft, especially with high-net-worth goods. Thefts love these types of goods because they can sell or consume them immediately.

Gold Solved Bartering Problems

Due to multiple bartering challenges, a medium of exchange (money) was necessary.

Initially, many things played the role of money. For example, cattle, potatoes, and salt were money for some time. However, they did not live long due to problems associated with them.

For example, rice was used as money in Japan. It had the following problems:

  • Rice is difficult to store
  • Its transportation is not easy
  • Its quality is shrinking over time
  • Rice is not homogeneous. The rice from one land differs in quality from another

The challenges of various types of money forced people to look for alternatives. These alternatives are precious metals such as gold and silver.

For example, gold has qualities that can play the role of money for various reasons. And some of them are the followings:

  • Gold is homogeneous 
  • Gold is divisible
  • Gold transportation is easier than other commodities such as cow and potatoes
  • Gold is durable and last for thousands of years
  • Gold is limited
Share
Tweet
Linkedin
Pinterest
Reddit
Email
Prev Article
Tags:Economics Money

Related Articles

What Is a Business Cycle? Phases, Features, & Examples
The business cycle is also known as the economic cycle, …

What Is a Business Cycle? Phases, Features, & Examples

Balance of Trade: Types, Impacting Factors & More
Balance of trade (BOT) refers to the difference between imports …

Balance of Trade: Types, Impacting Factors & More

Types of Economic Indicators: Leading, Coincident & Lagging
Economic indicators are yardsticks that help to study past, current, …

Types of Economic Indicators: Leading, Coincident & Lagging

What Is Fiscal Policy? What Are 3 Types of Fiscal Policies?
What Is Fiscal Policy? Fiscal policy refers to the revenue …

What Is Fiscal Policy? What Are 3 Types of Fiscal Policies?

3 Types of Government Budget Balances Explained
A government budget is a revenue and expenditure plan typically …

3 Types of Government Budget Balances Explained

Fundamental Analysis of Stocks
Fundamental analysis is examining a company’s ability to generate revenues …

Fundamental Analysis of Stocks

About The Author

Zafari

Zafari is a professional trader and has been in the financial market since 2014. He has a bachelor of public economics and an MBA. For some reason, he does not show his face. And he loves you all!

Leave a Reply Cancel Reply

  • Recent
  • Popular
  • Comments
  • Tags

Srading.com

QUICK LINKS

  • About
  • Cookies Policy
  • Terms & Conditions
  • Disclaimer
  • Privacy Policy
  • Contact Us

LATEST POSTS

  • Elliott Wave Theory Guide for Beginners
  • Top Continuation Candlestick Patterns
  • Top Reversal Candlestick Patterns
  • 6 Popular Continuation Patterns & How to Trade
  • 8 Popular Reversal Patterns and How to Trade Them

FOLLOW US ON SOCIAL MEDIA

  • Facebook
  • Twitter
  • LinkedIn
  • Instagram
  • Pinterest
  • Telegram
  • Reddit
  • YouTube

Trading financial assets are risky. Everything you read on this website is just for educational purposes or personal opinions only. Read our DISCLAIMER!

Copyright © 2023 Srading.com

Ad Blocker Detected

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by disabling your ad blocker.

Refresh
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By continuing this website or clicking “Accept”, you consent to the use of ALL the cookies.
Do not sell my personal information.
Cookie SettingsAccept
Cookies Policy
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT