Trade is a basic economic concept involving buying and selling of goods and services, with compensation paid to seller by buyer, or exchange of goods or services between the parties. The most common medium of exchange for the money, but trading can also be performed with the exchange of goods and services between two parties, called the barter or pay with the virtual currency, the most popular of which is bitcoin. In financial markets, trading means buying and selling securities, such as the purchase of shares on the new York stock exchange (NYSE).
Breaking down the “trade”
Trade refers to transactions of any complexity, from the exchange of baseball cards among collectors to multinational policy, configure the protocols to import and export between countries. Regardless of the complexity of the transaction, the trade is carried out through three main types of exchanges. Transactions are carried out with the payment of sovereign currencies, exchange of goods and services and pay for with virtual currency.
Currency as a medium of exchange
The money, which also functions as unit of account and store of value, is the most common medium of exchange, providing different ways to transfer funds between buyers and sellers, including cash, ACH transfers, credit cards and wired funds. The attribute of money as a store of value also provides assurance that funds received by seller as payment for goods or services may be used for purchases or the equivalent in the future.
Non-cash transactions involving exchanges of goods or services between the parties, referred to as barter transactions. While barter is often associated with a primitive, undeveloped societies, these operations are also used by large corporations and individuals as a means of obtaining a Product in exchange for unnecessary, ineffective or unwanted assets. For example, in the 1970-ies, PepsiCo. create a barter agreement with the Russian government to trade Cola syrup for vodka stolichnaya. In 1990, the deal was expanded to $ 3 billion, and included 10 Russian-built ships, which PepsiCo to rent or sell in the years after the conclusion of the agreement.
As the exchange of virtual currencies do not provide the holders of currency risks, to provide anonymity between trading partners if desired, and to avoid the often-substantial fee for credit card processing. The most popular virtual currency Bitcoin, which was introduced in 2009. Bitcoins are stored in virtual wallets and can be used with the growing number of web merchants, including WordPress.com, Overstock.com and okcupid. In addition, some online stores that support individual traders (such as Etsy) provide the traders with the tools to conduct their transactions using virtual currency. There are also courts for conversion of virtual currency into gift cards. Virtual currency is often popular with small businesses partly because of the lack of processing fees.