What is called a barter system?

The barter system is the traditional form of transferring the goods and services for other goods and services. A barter system is an old method of exchange. This system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return. In a barter system, the goods are exchanged for another good. When goods are exchanged with each other, it lacks with many difficulties.

• Double coincidence of wants: One of the most difficult of barter system is the double coincidence of wants in which the buyer and seller should agree to sell each other's commodity in exchange even if they are not interested

• Difficulty in finding buyer and seller: It is very difficult to find the buyer who is need of commodity which the seller wants to sell.

• Store of value: the Barter system lacks the function of store of value because the sold commodities cannot be saved for future use whereas money can be easily saved as a deposit.