How Many Bags Of Rice Is WhatsApp Worth? Here’s Why Bartering Is Back On The Rise
Imagine the following scenario: After enduring months of product iteration and countless nights spent revising a launch strategy, a global shoe company’s product design team watches the final batch of footwear roll off the production line. The Chief Product Officer holds a shoe in his hand. The laces are woven meticulously between bronze metal clasps, branding is stitched into the rubber heel, a beautiful yet subtle design.
Marvelling the creation in his hands, the CPO says, “Congratulations team, we’ve created a product worth more than 100 bags of rice.”
If contemporary society operated in a barter system, perhaps this scenario of the shoe company would be a reality today. The principle of a barter economy is simple: goods and services are exchanged between two parties without the use of money.
From Salt to Coins
The act of bartering, perhaps human’s first form of commerce, dates back as early as 6000 BC, when goods were exchanged between the Mesopotamian and Phoenician tribes of the modern day Middle East. In Roman times, legionnaires were often paid in salt, one of the most valuable commodities of the time. The mineral became known as a commodity, along with tea, tobacco and cattle. As they were universally in demand, these goods provided enough lubrication to facilitate trade on a global scale. However, since they were hard to transport, difficult to store, and perishable, this led to the introduction of physical money as a means of exchange.
The monetary system then grew into what we know today, where coins and paper notes represent currencies, and by extension credit and debit cards represent those. But what has become of the barter system that served civilisations for centuries?
Apple For Pears
Today, the notion of bartering is especially relevant during times of economic instability when many families struggle to put food on the table or a roof over their head. Following the financial crisis in Greece, communities across the country turned to bartering often exchanging fresh meat, fruit, and vegetables. In the UK, initiatives like Abundance allow people to pick surplus fruit from private growers. For those in need of shelter, Camelot Property Management provides a live-in guardian option, which allows people to live in a property in exchange for acting as security against squatters, vandals and thieves.
Exchanging gently worn clothing is perhaps today’s most popular form of bartering. In recent years, the act of exchanging clothing has been coined as “swishing”, emerging as a trend for independently organized pop up events around the world. This ethical fashion phenomenon brings people together to exchange their unwanted items of clothing. One notable swapping event is Toronto’s Swapsity, which facilitates over 25,000 “win-win exchanges” each year.
Barter in the Digital Age
While the physical exchange of one good or service for another may seem a thing of the past, big name platforms such as Craigslist have made it normal once again to connect with our fellow human beings and decide how we want to value things in ways other than cash.
Today, bartering is making a big comeback in niche communities where the emphasis is on environmentally friendly, frugal living. In the non-profit world you have big companies like The Freecycle Network, which frequently organise swap events within local communities. And most recently in the startup world, the LA based TradeYa Inc. raised $1.1 million in seed funding to give people a means to barter both goods and services. Similarly, there’s also Listia, where everything is free, and Yerdle, which works on a credit system.
Tired of buying your child new clothes every 6-months? Try Swap.com or ThredUP, a company that has raised over $25m in investment, began as a platform to exchange used children’s clothing before relaunching as a digital clothing consignment hub. There’s also Swapstyle, founded in 2009 and winner of the Green Business Award, which offers an economically and environmentally friendly alternative to consumerism and shopping.
Enjoyed swapping out a few jumpers for a new pair of slacks? Why not try swapping out your home next? LoveHomeSwap offers over 50,000 homes in tourist destinations like Miami and Barcelona for those who want to swap homes instead of booking a hotel or paying for an Airbnb. Backed by a government-led grant, the platform is estimated to grow from 120,000 annual swaps to half a million by 2017.
What about bartering for bandwidth? New York City startup Karma operates its mobile WiFi network by giving you more gigs every time you share your network with those around you. How’s that for implicit bartering?
Bartering in Business
Whether you recognize it or not, trading “skills for skills” is a very popular form of modern day bartering. Thriving networks such as Barter Business Unlimited, which has over 4,000 registered members claims to increase sales, cash flow and improve operational efficiency of their associated businesses. While other startups like Skills Barter and Skills 2 Barter haven’t exactly taken off, we see the free exchange of services happen in our every day life. Take the rise of the shared working space culture for example where a graphic designer exchanges “free” logos for some law advice over friendly coffee break chats.
The underdeveloped Barter Economy shares many key principles with the thriving sharing economy, which includes companies such as Airbnb and Lyft. In 2013, Forbes estimated the revenue flowing through the share economy directly into people’s wallets would surpass $3.5 billion dollars, with growth exceeding 25%. But what if those dollars we’re replaced with existing goods or services? Then our sharing economy would truly be what its name suggests.
But can our modern day society work without some form of stable or unifying currency? In our imaginative world where a new pair of shoes amounts to 100 bags of rice, what might Facebook have given in exchange for acquiring WhatsApp?
This article was originally posted on Transferwise’s Money Without Border blog here.