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What is Barter System?- Define, Check Meaning for Class 10

What Is Barter System?

What is Barter System- A direct trade for products and services is involved in bartering. Bartering took time while participants worked out the terms of the trade, despite the fact that some features of this transaction are comparable to the exchange of money. The use of money as a means of exchange greatly streamlined trade. The monetary system that governs modern civilization had its roots in trade and barter. Although trade and barter may appear virtually antiquated, they were the go-to business strategies for those who lived before credit card processing was convenient.

Barter System Meaning

Barter System Meaning, Bartering is the process of exchanging products or services between two parties without the use of money. Everyone wins when people trade goods or services because they get what they need or want. Another benefit of bartering is that it allows those without access to financial resources to acquire necessities. Bartering may entail exchanging a service for tangible goods. In exchange for a bushel of apples from a tree in someone else’s yard, for instance, you can promise to do some yard work for them. People might save their money for other needs when they decide to barter for a necessity.

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What is Barter System?- Class 10

What is Barter System for Class 10 Students- Bartering is the act of exchanging goods or services directly for one another in commerce without the use of a formal payment system like money. Most small-scale communities conduct trade through bartering or exchanging goods and services without the use of money. Barter is frequently used as an exchange medium in times of monetary crisis, such as when the currency is unstable (such as during inflation or a downward spiral) or not available for use in commerce.

When bartering initially started, all transactions had to be done in person. Bartering is becoming popular today because to the internet and other cutting-edge trading tools.

Define Barter System- Benefits

  • Barter can be used when you need to swap goods or services but do not have access to cash. For instance, one company might need assistance with a project, and another company might have the time or resources to finish it.
  • Without using cash, you can trade products and services by bartering. One will be in a better position if they can provide more goods and services. Money is not the main consideration while trading. People can obtain what they require in exchange for what they already possess through the use of a barter system

Define Barter System- Drawbacks 

  • Although barter has played a crucial role in human history for generations, it is ineffective and frequently untrustworthy. Barter is unappealing from a commercial standpoint since it does not offer a means of storing value for future use and cannot be utilized as a unit of account.
  • Attempts to ensure fair exchanges in a barter system can get very complicated. It’s crucial to keep in mind that while barter exchanges are ideal, they aren’t always feasible if you’re engaged in one. When different commodities are traded, they become even more challenging.

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Barter system- Applications 

  • Bartering is becoming more and more popular as a substitute for conventional cash-only transactions nowadays. You can exchange valuable goods or services with other people by bartering. For instance, you can exchange tomatoes for eggs if your neighbor has extra tomatoes in his garden and you have extra eggs from your hens. In the past, when people lived close to one another, they would exchange items directly rather than paying with money that might not have had any value in their community.


  • The money supply contracts during economic downturns, raising the value of products. To find a solution in such a situation, people may need to trade goods and services without using money. Barter systems are very adaptable and can help those who are unable to pay for the services they need.

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How Does Bartering Work?

Individuals: When two people have something that each other wants, they might decide on the value of the things and trade a certain amount of each. To ensure optimal resource allocation is the goal.

Bartering is the exchange of goods or services between businesses. One business can offer its products or services in return for those of another. Currency swings are eliminated by doing this, especially when foreign exchange is involved.

A nation may trade some products with another nation in exchange for the products that it requires from the other nation. This can aid in managing a nation’s trade deficit and debt.

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Barter System- FAQs

Question 1 What is barter system with example?

Ans. Barter is an alternative method of trading where goods and services are exchanged directly for one another without using money as an intermediary. For instance, a farmer may exchange a bushel of wheat for a pair of shoes from a shoemaker.


Question 2 Who started the barter system?

Ans. Phoenicians

Mesopotamia tribes were likely the starting point of the bartering system back in 6000 BC. Phoenicians saw the process, and they adopted it in their society. These ancient people utilized the bartering system to get the food, weapons, and spices they needed.


Question 3 Where is the barter system used today?

Ans. Centuries old annual barter trade takes place in Assam. This mela is known as Joon Beel Mela. People from Assam, Arunachal Pradesh and Meghalaya take part in this 3 day annual fair, where commodities are exchanged through the barter system.

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