Barter

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Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, such as when the currency may be either unstable (e.g., hyperinflation or deflationary spiral) or simply unavailable for conducting commerce.

Contents

History

Contrary to popular conception, there is no evidence of a society or economy that relied primarily on barter.[2] Instead, non-monetary societies operated largely along the principles of gift economics. When barter did in fact occur, it was usually between either complete strangers or would-be enemies.[3]

While one-to-one bartering is practised between individuals and businesses on an informal basis, organized barter exchanges have developed to conduct third party bartering. A barter exchange operates as a broker and bank in which each participating member has an account that is debited when purchases are made, and credited when sales are made. Compared to one-to-one bartering, concerns over unequal exchanges are reduced in a barter exchange.[citation needed]

Modern trade and barter has developed into a sophisticated tool that can sometimes help businesses increase their efficiencies by monetizing their unused capacities and excess inventories. The worldwide organized barter exchange and trade industry has grown to an $8 billion a year industry and is used by thousands of businesses and individuals. The advent of the Internet and sophisticated relational database software programs has made it easier to conduct these activities and has further advanced the barter industry's growth. Organized barter has grown globally to the point where virtually every country now has a formalized barter and trade network of some kind. Complex business models based on the concept of barter are today possible since the advent of Web 2.0 technologies.[citation needed]

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