What is a significant drawback of the barter system?

A significant drawback of the barter system is that it involves uncertain purchasing power. In a barter system, goods and services are exchanged directly for other goods and services without a standardized medium of exchange, such as currency. This creates variability in the perceived value of the traded items. Unlike money, which has an established value and is universally accepted, the worth of goods in a barter exchange can fluctuate significantly based on factors like supply and demand, seasonal availability, and individual negotiation skills. This uncertainty can lead to difficulties in ensuring that both parties feel they are receiving equitable value in the exchange, making it challenging to determine fair trades and complicating transaction efficiency.

Additionally, the reliance on mutual need complicates transactions further; both parties must want what the other has to offer at the same time, making it less practical for larger or more complex exchanges.