Bartering

Bartering is the direct exchange of goods or services between two or more parties without using money. In a barter transaction, participants trade items they value and who desire what the other offers, often relying on the double coincidence of wants.

Bartering predates monetary systems and has appeared in many civilizations. It remains common in informal markets, in economies with unstable currencies, and in certain online and local exchange platforms. Modern bartering often uses intermediaries or standardized credits to ease matching.

Traditional barter requires a direct match of needs, which can be inefficient. To reduce friction, barter exchanges and local exchange trading systems (LETS) use cataloged goods or unit credits to facilitate trades, while time banking values services in hours rather than goods.

Advantages include usefulness when currency is scarce, low-tech exchange in close-knit communities, and the ability to move surplus inventory. Disadvantages include transaction costs, valuation difficulties, indivisibility of items, perishability, and the need for reciprocal willingness, which can limit scale and efficiency.

Today, bartering occurs in corporate contexts (media, advertising, or services), online marketplaces, and community networks. Some jurisdictions require reporting of barter earnings for tax purposes, as the fair market value of traded goods and services may be taxable. Examples include LETS programs and professional barter networks.