Barter is the exchange of goods and services without the exchange of cash. It is one of the oldest business practices in the world. The process of bartering goods or services relies on the seller finding a buyer who has something of equal value in return.
The International Reciprocal Trade Association (IRTA) notes that the volume of barter transactions is in the 12 to 14 billion-dollar range per annum. Most of this amount comes from traditional retail barter exchange companies and corporate barter.
The barter business provides manufacturers and distributors with an alternative to the traditional selling channels when companies have surplus products. When these companies do not accurately predict demand, they are forced to dispose of goods and or services at greatly reduced prices, yet they must do so without negatively affecting their regular selling channels.
What is a Barter Exchange? How does a Barter Exchange work?
A Barter Exchange consists of a group of members who receive credits for their goods or service. The accumulated credits can then be used with any other member of the exchange. This eliminates the need to find a direct match of someone who has what you want and wants what you have.
A barter exchange serves as a third-party record keeper and coordinator of barter transactions between members of the exchange.
Barter exchanges provide monthly accounting for each member. Applicable taxes are payable on barter transactions. Barter “dollar” credits are recognized by the Canadian Revenue Agency as having equal value to cash (fiat currency).
FTI has over two decades of experience in both the surplus goods (liquidation goods) and barter businesses.
Application of blockchain technology has potential to provide opportunities for their future success.
FTI steps forward to be a powerful force of growth and change in the evolution of both industries.
Bringing Blockchain Technology to the Surplus Goods (Liquidation Goods) and Barter Industries
A blockchain is an encrypted ledger of transactions, resistant to tampering with non-centralized management. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block contains a cryptographic hash of the previous block, a time stamp and a transaction data.
A blockchain is resistant to modification of the data; it is “an open distribution ledger that can record transactions between two parties efficiently and in verifiable and permanent way”. A blockchain is managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered without the alteration of all subsequent blocks, which requires consensus of the network majority.
Blockchains are secure by design; decentralized consensus has therefore been achieved with blockchain. This makes blockchains suitable for recording of record management activities.
Advancement of blockchain application to both Surplus Goods (Liquidation Goods) and Barter has potential for goods and services to be traded with confidence, both locally and internationally, among different barter exchanges and/or corporations.
Blockchain technology has potential application for barter exchanges by standardization of processes within and between exchanges. Currently, trading between barter exchanges often breaks down because of the lack of standardization/familiarity between the exchanges. By merging blockchain technology with current barter exchanges, FTI expects to enable members to safely and securely conduct transactions using blockchain technology. This increased security should give users a higher level of confidence in the integrity of the barter exchanges.
Assurance that funds are available
High speed transactions
Relative value of exchange dollars assigned to different exchanges (similar to money exchanges between different countries)
Up to the minute record of member purchases and sales (trade dollar) status
Traceable detailed records, including product origin, for each transaction
Perpetual and permanent record of transactions for month-end and tax reporting
Safe and Secure transactions through encryption