Bartering, which dates back to around 6,000 BCE, was one of the earliest exchange mediums used. For instance, if Kristie produced bread but wanted silk, she could go to Mark, who is known for manufacturing silk, and ask for it. If the transaction were to take place without any currencies, Mark might agree to give twenty loaves of bread in exchange for some silk.

This gives you a rough idea, but there are 3 core issues at the heart of the bartering system as a medium of exchange:

  • A “double coincidence of wants” must occur
  • Divisibility issues arise
  • Valuing the goods being traded are problematic
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