RUNNING HEAD: IT in a Global Economy 1

University of the Cumberlands

Final Paper

ITS 832 – Info Tech in a Global Economy

Introduction

Advancement in technology has allowed globalization to come into realization. People are

able to communicate and conduct businesses with other individuals from different

geographical regions. Business trends have also changed, and the economy has been

positively impacted by this factor. Information technology has led to more efficient and easier
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business conditions. Information technology has led to introduction of e-commerce which

allows companies and customers to interact at the comfort of their homes by just using their

phones that have an access of internet. This has created a conducive environment for global

economy because there is an increase in the flow of cash. Business activities between

different countries have increased because of the ease and convenience that exists.

There are some factors that have also contributed greatly to this. Some of these facts include

government policies which in turn affects how businesses are conducted in different

countries. The other factors are new inventions that have helped in revolutionizing the

business sector. The paper is going to look at some of these factors.

Blockchain

Block chain is a concept that entails a combination of several different applications and

technologies. Block chain is a decentralized ledger that has been digitalized and enables

people to keep records of all peers –peer transactions without the help of centralized

authority. The concept behind blockchain is similar to that of the internet which has several

underlying applications and technology (Blockchain, 2017). Many entrepreneurs believe that

block chain can be a good transformation to the business sector just as the internet was. Block

chain has been seen to having a great potential and can even serve as a re-placement to the

central banking platforms and even lead to improvements of other sectors such as health

information sharing, trades, automotive ownership and voting. Block chain by design is

resistant to data modification and that is because it is an open distributed ledger which has a

record of transaction between two parties efficiently and in a permanent way that is

verifiable.

Block chain was invented by Satoshi Nakamoto in 2008 and its main aim was serving as a

public transaction ledger for crypto currency bitcoin. This invention made block chain for
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bitcoin the first digital currency that was able to bring a solution to the double spending

challenge without the need of a central server or a trusted authority. The most common crypto

currencies include bitcoin and Ethereum. A cryptocurrency provides a medium of exchange

which is just as similar to the US dollar. Instead, blockchain exists across the whole computer

network. And just as the name suggests a blockchain is a series of blocks that have been

chained together through the use of complex computational algorithms (Bradford & Florin,

2003). To be able to create a block then data that contains transactions is gathered in the data

part of the block. The main components of the blockchain ecosystem include the following;

1. Node application

2. Distributed ledger

3. Consensus algorithm

4. Virtual machine

Node application

It is a specific application that every device that is connected needs to download and then

install when they want to be part of the blockchain ecosystem. The devices will only become

part of the ecosystem when they have installed the application. The ecosystem functions

under a basis of a service overlay network (SON).

Distributed ledger

It is important to first understand the basic ledger. A ledger can be defined as a file which has

a record of transactions and other data about the user. The distributed is in some way similar

to the normal ledger. It is a ledger that is distributed across every individual connected to the

network. It is a database that is shared, replicated and synchronised among the peers who are

connected to the network. The most important feature if the distributed ledger is it being

decentralized which is a primary advantage for the users.

Consensus algorithm

To begin with, transactions made in the blockchain are extremely secure and verified and that

is not because of the decentralization. The consensus algorithm is the reason behind the

security. Consensus algorithm is a computer science process that is used to get agreement on

data amongst the distributed systems. Having provided multiple nodes, the blockchain used

this concept to provide reliability in the network.

Virtual machine

It is the last component to the blockchain ecosystem that is seen as logical. Its

implementation is part of the node application. A virtual machine is a computer program

created machine. It is therefore an imaginary machine that is located in a real machine. A

good example is the Ethereum virtual machine (EVM) that is found in the Ethereum

blockchain ecosystem. The EVM in this case helps in management of the nature of the digital

contract because it understands instructions. In the node application, the EVM enforces the

terms of the contracts then releases the ‘ether, which is a digital token, as part of the

transaction. The cryptography is used to secure the contract ensuring that it is not tampered

with.

Future of Blockchain

Blockchain technology has been seen to have a great potential because researchers have

predicted that it could innovate and disrupt main areas in the business sector. One of the

sectors that have been seen to benefit greatly from the implementation of the blockchain
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technology is the accounting industry. This will be through the automation of the different

manual processes that a major part of the accounting standards is built upon. The current

financial accounting has a lot to deal with and even though this is to ensure accuracy and

verifiability it also comes at a great cost and labour which is time consuming. With the

introduction of blockchain, firms could do the recording of the transactions directly into the

joint register which then creates an accounting records chain.

The blockchain will be helpful in making business transactions easier as the data is already

recorded, and it would also ensure that falsifying and altering of accounting records close to

impossible. All the records will be recorded and verified electronically and instantly and

allow automated audits. Also because of the extreme security and the ability of the

blockchain technology to instantly verify information it is seen as a good venture for the

health sector especially in record keeping and also in voting. But there is also a negative side

to the technology because it could allow people to be involved in illegal business

transactions. A good example is the creation of the Silk Road by Bitcoin. The Silk Road was

an illegal online marketplace where people could buy and sell illegal substances and products

and it was very success until 2013 when it was closed down by authorities. This shows that

such a platform could be used by law breakers such as terrorists to conduct shady businesses

that would lead to a lot of damage to members of the public.

Big Data

Just as the name suggests, big data is data that is huge. It is a collection of data that has a big

volume and is still increasing exponentially with time. The traditional data management tools

cannot store this data, and neither can they process it efficiently because of its volume. The
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introduction of big data has resulted to the revolution of the environment both socially and

economically. New opportunities are coming up because of the better understanding of the

environmental trends together with the social impacts of supply chains. It is also important to

note that big data is not just big, but it can be differentiated by the 4Vs which are variety,

volume, veracity and velocity (Boyd & Crawford, 2012). The biggest promise that big data

offers is its ability to offer sustainability and one can only use this factor to their advantage if

only they can exploit the different combinations of those 4Vs.

The volume of the data is not that important if organizations and firms cannot use it to their

benefit. Analysis of big data could lead to firms and organizations making better decisions

and strategic moves in their business ventures. Big data is vital for various reasons. To begin

with, big data is used to reduce cost that firms incur through detection of fraudulent

behaviours before they take a toll on the organization. A good example is the case of Walt

Disney World who used the energy management program which was launched in late 1990s.

the program collected information hourly on their consumption of water, electricity and other

resources. The company was able to collect the information and share it with other

stakeholders such as the executive managers and maintenance crew who analysed it and were

able to reduce their annual electricity consumption by around 100 million kWh. Big data is

also used in development of new products which take advantage of the market trends and

give the company a lot of profits. This is done through collection of data on customer needs

and their buying trends. From the information, the manufacturer or company is able to know

their customer’s needs, buying power and areas where they are located. This information is

essential in creating products that meet these standards, because products that are customer

centred do very well in the market. A good example for instance is the current situation

where there is an outbreak of corona virus. With this condition, manufactures have known

from the information collected that many people are in need of medical supplies such as
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gloves, sanitizers, mask and personal protective gear. It is also clear that people are stocking

up their food supplies so that they do not have to go out frequently. This therefore means that

manufactures will start focusing on these products because they are doing very well in the

market and even produce more of them to meet the demand that exists. They will also have to

look at the buying power of their customers in different regions so that they offer their

products at affordable prices that the population can afford. When it comes to the food stuff

industries, they will have to offer products that have a longer shelf life so that customers can

stock up even more of those products without the fear of them going bad quickly.

From the information it is clear that big data has revolutionise the global economy because it

now easier for organizations to collect information on different issues both internally and

externally which has led to better decision making and strategies. In addition to that firms can

now take calculated risks which in most cases leads to success and growth of the global

economy.

Government and policies

In the global economy there are a lot of stakeholders and the government is one of the major

stakeholders and they play a very vital role. The government determine the conditions of their

business environment. They can do that through the policies that they implement. The

policies will determine whether the competition will be primarily between local companies or

with multinational companies. A good example is the Free State market policy and the

government regulated policy. In the free state market policy, the government does not control

much of the market as it allows foreign countries to export goods to their countries at low

tariffs which is allows people to access goods at lower prices due to the competition from

imported goods. But that does not mean that the government does not intervene in any of the

economic state of the country now that they have implemented a Free State market. In fact,
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they have a lot of say that the term suggests. A good example of a country that implemented a

Free State market is the United States which has made their market a favourite destination for

imported goods because of the favourable environment due to fewer taxes imposed on

imported goods. But this has a negative effect on local products because more people will

tend to purchase imported goods due to their affordability compared to local products.

There are different reasons that would push governments to make such decisions.

Governments that chose to have control over their economic affairs have the aim of attaining

their political and socio-economic goals. The other nations that prefer to stay out or have very

little control of their economic affairs believe that they will get out the best results from

economies that are unregulated. Currently the biggest economists in the world are capitalists,

which mean that the system and policies put in place allows businesses and individuals to

compete and own properties in their pursuit of profits and economic growth. In this system

companies and individuals are in charge of decision making that when put together results

into a bigger economic picture which also plays a role in the global economy.

There is no central authority that has been given the mandate to make decisions on the kind

of goods and services that companies need to offer and the price that the goods should be sold

at. The competing forces of supply and demand determine all these factors and how the goods

will be distributed. In the United States for instance, it is believed that the economy will grow

exponentially when there is freedom and competing forces are allowed to shape the economy.

This kind of system has allowed the growth of multinational corporations that operate not just

in their country of origin but also in foreign nations. A good example in this case is the Coca-

Cola Company that operates in more than 250 countries and is doing very well. The business

environment globally has improved also because of the advancement of technology which

makes it easier for people from different regions to do business efficiently. This has increased

competition because of the new strategies that companies are employing. Competition is also
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good because it ensures that customers get quality goods and services and at affordable price

too. Due to these factors new products have been introduced into the market that meet

customer needs and this has transformed the economy. Companies are not just looking for

profits, but they also want to satisfy their customers’ needs because that is the key to their

growth. Governments should therefore learn from developed countries that a Free State

market policy is the best way to go and even if they have to maintain control over the

economic affairs of their countries, they should have a system that gives room for fair

competition between firms.

In conclusion, it has been proved how the global economy has been transformed by the

various factors that have been discussed. These factors may have their negative effects, but

they have proved to be more effective in the positive transformation of the economy.

Information technology is one major factor that has worked to the advantage of organizations.

Since the introduction of IT, the business environment has never been the same as business

has grown and the flow of cash around the globe has been immense.

References

Blockchain. (2017). Market Capitalization. Retrieved from

https://blockchain.info/charts/market-cap
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Bradford, M. and Florin, J. (2003). Examining the Role of Innovation Diffusion Factors on

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Boyd, D.; Crawford, K. (2012). "Critical Questions for Big Data". Information,

Communication & Society. 15 (5): 662–679. doi:10.1080/1369118X.2012.678878.

Campbell, R. (2016). PwC Expert: $1.4 Billion Invested in Blockchain in

2016.CryptoCoinsNews. Retrieved from https://www.cryptocoinsnews.com/pwc-

expert-1-4-billion-investedblockchain-2016/

Viktor Mayer-Schönberger; Kenneth Cukier (2013). Big Data: A Revolution that Will

Transform how We Live, Work, and Think. Houghton Mifflin Harcourt.

ISBN 9781299903029. OCLC 828620988.

Solnik, Ray. "The Time Has Come: Analytics Delivers for IT Operations". Data Center

Journal. Retrieved 21 June 2016