Main Advantage of Current Currency Over a Barter System

Subject: Finance
Pages: 2
Words: 465
Reading time:
2 min

The currency is one of the most fundamentals of human invention. The currency is the basic quality of general acceptability, it acts as the medium of exchange, a measure of value. Standard of deferred payments and the store of value. The most vital characteristic feature distinguishing the currency from the other assets is liquidity. Currency occupies a central position in the economy as they act as the medium of exchange or the means of payment. Purchase of goods and that of claims like stocks, shares, and bonds are all generally made with the agency of currency.

The main advantages are in the form of the currency and it involves the income received in the form of currency. The significance is that it can act as a claim in different contexts, the barter system is completely unaware of the value, measure, and accountability. The one way in which the currency can act as the claim against the income and the expenditure and the currency notes can be claimed in the exchange of the gold or the silver coins, wherein a barter system the one person has to suffer if his commodity is of a higher value. The term of profit and revenue are emphasized in currency but in the barter system goods are the only term emphasized. “Besides being able to transform their notes and bills of exchange into funds immediately available for purposes of commerce, businessmen derive great advantage from the superior convenience, safety, and elasticity of bank currency”.

A barter system is a system where the exchanges of the goods are done for the goods. “This Barter system was in use when there was no proper trade or service. Barter system was not useful for the development of trade and economy”. The barter system was into practice when money was not invented. There were many disadvantages for the barter system and the main defect was the ignorance of the standard value. When the exchange of goods is taking place between two persons they can reach in standard equilibrium condition in terms of value but the value of one product may be superior in comparison with the other.

The second disadvantage is that the goods cannot be divided, when the exchange is for the various things where one can be divided and another cannot, the problem of indivisibility arises. The main advantage of currency over the barter system is the store of the value, where the currency is essential for production. The main advantages and the functions of currency are alike which were the disadvantages of the barter system, where the functions in concise include them as a measure, medium, standard, and the store of values.