Barter is perhaps the most ancient form of trade,
predating money by millennia. The concept is very simple – if you give me two
goats, I will give you eight clay pots. One of the reasons that barter worked
so well in early societies is that it was a straightforward exchange of value
that happened at a particular point in time – where each party perceived that
they had received more value than they gave away.
However, the problem with barter was – and is – that
it does occur at one point in time, and is a transaction between two parties.
Because of this, opportunity to drive trade is limited unless the goods
that are bartered are a good vehicle for holding value – for example, no one
would want to use goats as a way of banking value unless they were a goat
farmer. Therefore, the opportunity to accumulate wealth is limited.