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Barter System is basically a kind of trade where goods and services are exchanged in return of other goods and services. No money is used in this process. Barter system is the root of all the economic system of today. Goods have now been replaced by money.
Following are the weaknesses of Barter System:
- Difficult to find a person or entity with the want you have the goods for and at the same time having a good that satisfies your need.
- There is no Standard value in this system. And one party usually suffers.
- The commodities can not usually be divided.
- There is no wealth generation. And even if there is that wealth can not be stored.
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