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New Barter Exchange Concept

Not technically a barter exchange - no intermediate money.
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There are barter exchanges where businesses can post their excess inventory or service time and trade it for fake money (called trade-notes or something like that), which can then be used to purchase things from other members of the barter exchange. It's not really barter, just an alternative currency. The exchanges are typically required to keep detail records and collect/pay taxes as if the money were official currency.

My idea is to take a more direct route and avoid the currency situation altogether. I'm sure they'll come up with some way to tax the service, but it will take some time. Here's how it works:

Members post the items which they are willing to give away. They then browse through the listings and flag the things they want. The central server uses sophisticated optimization techniques to link up a web of trades between members. Member A sends his books to member B, who sends her antique chair to member C and a collection of barbies to member D. Members C and D send their car parts to member A... Except it would involve thousands of members and items.

Each member gets a notice via e-mail when a plausible trade-web has been formed. They don't need to know the whole web. They are just informed, "You will send this and that to these people, and someone else [click here to review feedback] will send you these other things, which you have flagged as something you want. Do you accept this transaction?" If everyone accepts, they all ship the items and in a few days, receive their items.

Obviously there is some risk here, but a feedback mechanism could help to prevent that. If someone has even one negative feeback point, it would be smart not to accept the offer.

Also, instead of letting anyone just sign up, it would require a referral from some other member. Member feedback is affected by the feedback of people whom they have referred, so members will refrain from referring untrustworthy people.

It would be useful for people to give the system a ballpark value of the items they post, so it won't try to link up someone's $2000 computer with a $5 book they flagged, but that would open up doors to taxation... So it might be better to just have everything with a par value of $0 and let people decline the bad offers.

There are many more details, but this post is getting long enough as it is. I welcome comments on how to improve the idea, or comments that show how it would be impossible. I think it would be possible if the feedback system were balanced well enough to weed out fraud very quickly.

DarkEnergy, Mar 15 2006

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       Actually I was just thinking the valuation could be one-sided, where the people give a value of their own listings as they post them. That way the computer would have a ballpark figure so that it doesn't waste bandwidth (and people's time) sending offers to trade the Ferrari engine for a pencil sharpener. It's possible that someone collects Hulk Hogan pencil sharpeners and values it at 400, I guess, but it's not too likely unless person A above doesn't realize that he's got a serious collector's item.   

       Really I don't think there should be any numbers entered by the users, or the tax collectors could say, "You valued that at 10 and agreed to trade it for that stuff, so it's the same as if you sold it for 10 and bought the stuff. Give me my 2."   

       Rubbish-bay.com might actually be accurate. :-( But hopefully people would be discouraged from posting a bunch of trash, due to the fact that they'll have to pay a lot of postage to send those little things to different people in order to get something of value.
DarkEnergy, Mar 15 2006
  

       I like the idea, but I remember games of Monopoly with my family. Having someone repeatedly offering stupidly bad deals ("I'll buy Mayfair from you for 50 pounds") gets tiresome fast. That might be a problem with all the bad deals that you'd get offered on this site.   

       So, my suggestion is that you could set it up so that whenever a user flags something she wants, she selects (from her list of things she's willing to trade) which ones she'd be happy to swap for that item. ("I'll swap my Meatloaf CD collection, my giant rubber band ball, or my old Amiga for those five barrels of beer, but not my diamond necklace or my Mongolian yurt...")   

       That would increase the chance of computer-located chains 'sticking', since the users have already said the trades would be acceptable. And still with no cash values for mean taxmen to latch on to.   

       (It makes it more user-interactive, too - if there's an item I really want but I haven't been looped with it yet, I might change my offer - now I'm prepared to swap my Mongolian yurt for those barrels of beer. Woohoo! Now there's a loop!)   

       You'd still need the confirm part so that users can decline if someone has a low feedback rating. But if you have two profile settings that users can change, one for "I only wish to receive goods from users with feedback rating greater than 4/5" and one for "I only wish to participate in trade loops with users who have feedback rating greater than 4/5", then that would also allow the computer to find loops acceptable to everyone.   

       The confirmation part would now just be a check, "Great news - you're in a TradeLoop! You'll get five barrels of beer for your Mongolian yurt, just like you wanted. The beer-seller's rating is 4.5, and the lowest rating in the loop is 4.2. Do you still have your Mongolian yurt to trade? Click yes to confirm the trade or no to break the loop."   

       Site slogan: "Go loopy - go to TradeLoop.com! Get what you want, for what you're happy to give! TradeLoop - where everyone gets a good deal!"
imaginality, Mar 15 2006
  

       you wouldnt really need trade-notes- if someone really wanted something it might make more sense if both parties were in agreement over the trade items-...however... the middle company will want to take a small "fee" for trade negotiation and have the items sent to them, for inspection and to make sure both parties recieve their desired item(s)
wakeNbake, Mar 16 2006
  

       Nice. [+]   

       But, if you think you'll avoid taxes, "good luck with that".
sophocles, Mar 16 2006
  

       //My idea is to take a more direct route and avoid the currency situation altogether.//   

       //It would be useful for people to give the system a ballpark value of the items they post, so it won't try to link up someone's $2000 computer with a $5 book they flagged//   

       These two statements seem to be in conflict. I'm still thinking on this one...
zigness, Mar 17 2006
  

       //It would be useful for people to give the system a ballpark value of the items they post, ... BUT that would open up doors to taxation// [emphasis added] :)   

       I don't know about elsewhere, but in the US, trades through traditional barter exchanges are taxed as if they involved cash. I would want to avoid having any notation of "cash value" involved, because then any taxation would require the IRS/legislators to come up with some arbitrary means of determining the value. This is likely to be opposed by a lot of people, because for example, it could also lead to flea market merchants, liquidators, etc. being taxed at the supposed "value" of their products as decided by law.   

       As sophocles implied, it's ultimately a futile effort, but it can be delayed for a while if done right.   

       Of course, the idea isn't for the sole purpose of avoiding taxes. It would also be an efficient means of trade for people who have a lot of stuff to get rid of, but not enough cash at the moment to buy what they want.
DarkEnergy, Mar 17 2006
  
      
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