Money and the Barter System of Trade

in hive-175254 •  2 months ago 

Barter trading is an ancient method of transaction whereby people traded goods for goods. A person could trade milk for meat and so on. I do not think civilization met barter because barter only works with people a very small amount of people who need the same goods but when needs begin to differ and the population begin to increase thereby having several options, it becomes difficult to trade because the goods intended to be traded with another party might not be needed at the time and so the Barter system become not appropriate for such trade. Asides barter, there need to be something of value that would be needed to sign trades, and that is where money came into being.


A medium of exchange which will be generally acceptable as a means of trade signifying the same value for the goods/services being traded for. First, it has to be generally acceptable, it has to be durable, it has to be a unit of account, money should be homogeneous, it should be easy to carry about, and it should be divisible and maintain its value for many years. Money among all other means of exchanges has been the only medium of exchange that meets this criteria.


Gold met the standard of money and was used to create coins but due to its scarcity, it was better seen as a security than a medium of exchange. Gold is mined in small quantity and this makes it very good for investment and store of value based on demand and supply but money remains what can be used to deal with day to day transaction.

The world has abandoned the gold standard and have moved to fiat completely thereby allowing the government the produce enough money as needed in the economy as well as enable exchanges between people in the market.

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Good article, is one of the things that is happening today metals are losing their value because it is possible to extract them faster and because the technology is literally inventing a new financial system based on the network.