Evolution of the Barter System as Economic Tool of the Future
So, you just bought a shiny new iPhone? You gave Apple 60K in return for that piece of technology. Do we stop to think what’s happening here? All over the world, currency is exchanged for a range of products and services, innumerable times throughout the day. Have you ever wondered why or when barter system and later money started being used?
History of money
The emergence of the current monetary system has a long and interesting history. In the past, there was no currency; only barter system worked. In the simplest of terms, bartering is a trading system that involves the exchange of products or services for other products or services without any money changing hands in the transaction (in fact, when money never existed). Bartering dates back to the time when societies were just beginning to develop and before the advent of coins and currency as we know it today. Initially, in a self-sustained economy,the earliest forms of barter were limited to the exchange of cattle or grain in lieu of cloth, pottery or other products.
Issues with barter system:
As bartering lacks a common unit of exchange and standardization, it is difficult to fix the right value for the goods being exchanged. You may end up exchanging a high value commodity for a low value commodity. Also a commodity that has a high value in one community may not carry the same value in another. Due to this, bartering lacks the efficiency that exists in a currency-valued economy. Currency provides not only a standardization of exchange, but also a store value and a unit of account.
Monetary value representation
With better socio-economic development and stable trade, barter system evolved into a symbolic representation of the monetary value. These objects included cowrie shells, as in India or Obsidian (volcanic glass) with Native Americans. Did you know that metal currency started around 1000 B.C when China started creating bronze and copper copies of the cowrie shells? Although King Alyattes of Turkey holds the mantle of creating the first ever coin in 600 B.C, it was the Tang dynasty in China that created the concept of paper money in 700-900 A.D but in Europe, paper currently was introduced in the late 17th century. While plastic money or credit cards were introduced in the late 1940s.
Though constant evolution of money remains, it has changed form over the ages. Although in a primitive sense, cowrie shells and other items that represented money of that eon changed, but the basic usage remains the same today. From paper money to plastic money and now the advent of the alternate currencies and bitcoins, which are considered as the first de-centralized cryptocurrency, it is constantly evolving to match current needs. Even after the implementation of money in the economy there are various aspects of barter system that will continue into the future. Cyber bartering is another way of using the existing resources by helping upcycle products. With the loss of trust in Governments and government regulated currency many people resort to cyber bartering to procure goods that they need.
The Future of the Barter System
It seems apparent that the future of the barter system will parallel internet-based tech developments and rapid globalization. It was once a primitive trading system has been transformed into a global trading format through the use of internet portals. As such, this could be viewed as a massive bartering marketplace in the global economy. Today, there are websites that have enabled businesses, individuals, and other types of organizations to break down those boundaries that have prevented trading in the past.
This new format, known as “cyber-bartering”, is considerably more developed than the traditional barter system because it operates using a commonly accepted “trade credit.” These credits may well be holding the future of bartering on a global scale. Additionally, it will help eliminate the need for smaller global companies to produce today’s accepted monetary units (such as the Euro, GBP, or USD) for payment of products and services.
There are bartering sites for individuals as well as corporates. Who knew that? Special sites such as Barterbee, Barterquest and Rehashclothes offer individuals various avenues for bartering. Swaptree and U-exchange are two of the most popular online barter exchange sites for the individual where you can barter used books, DVDs, etc.
The popular online rental finding site Craigslist has online barter message boards which see plenty of traffic.
Future of monetization
Furthermore, the global bartering community now contends that future technological advancements could see the barter system replacing currencies as forms of payment. This elimination of currency may have some distinct benefits. But considering modern society’s complexities and most governments’ reliance on money for societal services and support, one has to question whether or not the barter system could ever be a stand-alone system for procuring goods and services in today’s global marketplace.
Although with wearable technology, contactless payment bands and iPhone payments may further evolve the mode and methods of payment, you certainly need the resources to get a product or service. Modern bartering has brought the whole system to a complete circle yet it remains as important as ever.