The idea of a world without currency is hard to imagine, considering how much we rely on it.
Money is used to buy goods and services, so it’s almost taken for granted that this is how the world works.
No one invented money until recently. Before that, traders used a system called barter.
With barter, people traded goods and services directly with other traders. There was no money involved at the time.
In this blog post, we’ll explore the pros and cons of barter and currency. We’ll also answer your question about which one is better.
What is a Barter system?
A barter system is an economic system in which goods or services are exchanged for other goods or services, without the use of money.
Bartering was common in early civilizations and is still used today in some cultures.
In a barter system, people exchange goods or services based on their perceived value.
There are many advantages to using a barter system. For one, it eliminates the need for money, which can be difficult to obtain or process.
Additionally, it allows people to directly trade goods or services without having to go through a third party, such as a bank or a store.
Finally, it can be helpful in times of economic hardship when money is scarce.
There are also some disadvantages to using a barter system.
First, it can be difficult to find someone who has what you need and wants what you have.
Second, there is no guarantee that the person you are trading with will hold up their end of the bargain.
Furthermore, you may not have enough of what the other person wants to make an even trade. And fourthly, you may not be able to find someone who wants what you have to offer.
Despite its challenges, a barter system can be a helpful way to trade goods or services without the use of money.
If you are considering using a barter system, make sure you understand both the advantages and disadvantages before getting started.
What is a Currency System?
A currency system is a set of rules that determine how money can be used in an economy.
It includes the issuance of money, the regulation of its value, and the use of it for transactions. A currency system is necessary for an economy to run smoothly.
Bartering is the process of trading goods or services without using any currency.
In some cases, bartering was used in early societies to replace the use of money. However, in modern times, it has been almost entirely replaced with fiat currencies. Moreover, the money that most people use today has been heavily impacted by the gold standard. A gold standard is a system in which currencies are backed by physical gold.
This was the standard for currency, but it has mostly been replaced by systems that back currency with government guarantees or faith.
All in all, a fiat currency system is a system in which the value of money is not based on any physical commodity, but rather on the government’s decree that it be used as legal tender.
Most modern currencies are fiat currencies.
Pros and Cons of Barter and Currency Systems
There are pros and cons to both barter and currency systems. Below we will outline some of the key points for each system.
Barter System:
Pros:
- No need for a currency,
- Can be used in any situation,
- Easy to set up
Cons:
- Difficult to find someone who has what you need and wants what you have,
- Cannot be used to purchase everything (e.g., services),
- Can be time-consuming
Currency System:
Pros:
- Easy to use,
- Widely accepted,
- Able to purchase anything with money
Cons:
- Subject to inflation,
- There is a need for regulations,
- Counterfeiting could occur
A Deeper Introspection into the Pros and Cons of the Barter and Currency System
There are pros and cons to both the barter system and the currency system.
The main benefit of bartering is that it’s an informal trade. You don’t need to involve a third party, such as a bank or government, in the transaction to facilitate the exchange.
This can make it faster and more efficient than the traditional market system.
One of the disadvantages of the barter system is that you might have difficulty finding someone who has what you want and who wants what you have. This can make it difficult to get what you want through bartering.
On the other hand, the main advantage of a currency system is that it is more flexible than the barter system.
You can use dollars to buy anything you want, even if the person you’re buying from doesn’t have anything they want in return.
The main drawback with this economic system is that inflation can lead to lower value for money over time. That means it’s less valuable than other forms of wealth such as gold or silver.
Which one is better?
The barter system is the exchange of goods or services without the use of money. The currency system is the use of money to buy goods or services.
So, which one is better? That depends on what you need and what you have to offer. If you have a skill that someone else needs, then the barter system may be better for you.
For example, if you are a good carpenter, you can trade your carpentry skills for someone else’s gardening skills.
If you need to buy something that someone else has, then the currency system may be better for you. For example, if you need to buy a new car, you will probably use money to do it.
The Future of Barter
From the streets to the digital world. Obodo, an online marketplace for the people of Middle East based in Dubai, United Arab Emirates that utilizes Artificial Intelligence to find matches for the items that you’ve barter listed in accordance with the barter preferences specified.
Bringing a modern spin of the barter system, Obodo recreates real-life-like auction scenarios for barter trades as users can add offers, edit offers, reject offers and edit offers in real time as well as making counter offers on all public deals.
More on Obodo
Obodo is an online service that allows people to barter their items in a very easy and fun way – bring life-like auctions scenarios to the digital world.
More than the Barter feature, Obodo is also a buy and sell classifieds platform.
Bartering is not mandatory as the price of user’s items are public therefore anyone can buy them and pay cash only. More so, users can post their items through the mobile application and immediately start seeing people who are interested in their items and contrast the items on offer.
The barter feature considers the difference in price estimation of each item matched together for a barter deal; the user gets to set the estimate value of their product when posting their items to the platform as well as providing a description of the condition of the product.
The barter feature seamless shows the deals side by side detailing the price difference, which is automatically calculated, as well as detailing which party in the deal is getting paid the difference.
A user can pay or be paid the differential monetary value in the trade. For the user whose product is valued higher, the app shows the money a user gets in green and for the user whose product is valued less than the former, the money that must be paid is displayed in red.
The barter feature allows for granular or wide-ranging trades; After uploading one’s items, user i.e., choose their barter preferences – items they are interested in, this could be general categories (i.e., “Electronics”) or very specific (“Apple iPhone”).
Having set the barter preferences, the system will automatically match the user’s product with the right product. Furthermore, setting additional preferences such as a brief description of the barter item of interest, the AI will aid the user to get more accurate results.
Whether the user is a buyer or seller, Obodo gives users a lot of opportunity and options to exchange goods as all deals that are sent or received using the barter feature are all public, so anyone can engage a deal and counteroffer any of the products in the deal.
This innovative feature goes against the grain of traditional classifieds as users for the first time, can now see the interests of people and what kind of products they are sending offers to and show their products to them eliminating the ambiguity of selling and purchasing prices as sellers tend to hike prices for some on traditional classifieds.
Furthermore, when receiving an offer you can accept, reject and you can reject and counter with the price difference you choose. Giving more control to users to generate deals than ever before.
Moreover, Obodo not only offers beautiful and user-friendly user interfaces and seamless user experiences; but also offers dedicated chats – User Chats and Product Chats.
The former, Chat thread, offers user to user messaging, a more general chat thread between any two users. However, Obodo offers a more dedicated chat thread called Product Chat, which is readily accessible wherever a product appears; this allows user to create a chat thread about a specific product and all chats involved in this product are listed under it.
This allows for more organized messaging and tracking of interest of one’s products on the platform. All chats of a specific product are shown by a picture and a small description and chat are shown in subcategories.
With life-like barter auctions, classified listings, dedicated chats, and trade history of products – barter history and sales archives. Obodo is a good bet to reach unicorn status! We believe this application will shake up and improve the classifieds industry.
Conclusion
While there are many advantages and disadvantages to both barter and currency systems, it’s ultimately up to the individual to decide which currency system is best for them.
If you want to trade goods and services without using money, then the barter system might work for you. However, if you want to use currency as a means of exchange, then the system could be a better option for you. When you choose a system, make sure it meets all your needs and that you’re comfortable with it.
In short, Barter is not dead but rather thriving; Obodo can be described as the Tinder of products, offering a special and unique way to further improve classifieds, using public auctions for bartering. (Imagine eBay showing the bidders to the public!). Obodo is the next public barter auction marketplace.