Economics

Definition of Economics

Economics is one of the fields in social science that involves studies of economic activities and gaining an understanding of processes that govern the production, distribution and consumption of goods and services in an economy.

The term economics comes from the Ancient Greek οἰκονομία from οἶκος (Oikos, "house") and νόμος (nomos, "custom" or "law"), hence "rules of the house (hold for good management)". Economics focuses on the behavior and interactions of economic agents and how economies work. Consistent with this focus, distinctions exist between microeconomics and macroeconomics. Microeconomics examines the behavior of basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers.

Microeconomics examines how entities, forming a market structure, interact within a market to create a market system. These entities include private and public players with various classifications, typically operating under the scarcity of tradeable units and government regulation. The item traded may be a tangible product such as apples or a service such as repair services, legal counsel, or entertainment. In microeconomics, production is the conversion of inputs into outputs. It is an economic process that uses inputs to create a commodity or a service for exchange or direct use. Production is a flow and thus a rate of output per period of time. Distinctions include such production alternatives as for consumption (food, haircuts, etc.) vs. investment goods (new tractors, buildings, roads, etc.), public goods (national defense, smallpox vaccinations, etc.) or private goods (new computers, bananas, etc.), and "guns" vs. "butter".

Macroeconomics analyzes the entire economy (meaning aggregated production, consumption, savings, and investment) and issues affecting it, including unemployment of resources (labor, capital, and land), inflation, economic growth, and the public policies that address these issues (monetary, fiscal, and other policies). Since Macroeconomics analyzes the economy as a whole, it focuses highly on aggregates such as national income and output, unemployment rate and inflation. It focuses on the negative and positive effects of monetary policy by the federal reserve and fiscal policy.

The Federal Reserve has four main purposes:

• 1) Maintain Liquidity of Financial Market

• 2) Full employment

• 3) Stable Prices

• 4) Maintain the Federal Reserve's own independence

Other broad distinctions within economics include those between positive economics, describing "what is," and normative economics, advocating "what ought to be"; between economic theory and applied economics; between rational and behavioral economics; and between mainstream economics (more "orthodox" and dealing with the "rationality-individualism-equilibrium nexus") and heterodox economics (more "radical" and dealing with the "institutions-history-social structure nexus").

Besides the traditional concern in production, distribution, and consumption in an economy, economic analysis may be applied throughout society, as in business, finance, health care, and government. Economic analyses may also be applied to such diverse subjects as crime, education, the family, law, politics, religion, social institutions, war, and science; by considering the economic aspects of these subjects. Education, for example, requires time, effort, and expenses, plus the foregone income and experience, yet these losses can be weighted against future benefits education may bring to the agent or the economy. At the turn of the 21st century, the expanding domain of economics in the social sciences has been described as economic imperialism.

How New Media Influence the Economy

New Media Affect the Economy

New Media has become the age of data. Data has become so important to the business sector. Nowadays big companies are using data in order to advertise better. Data has helped companies grow but it has also helped an industry birth. The data industry of data brokering was born in the era of New Meda. Acxiom is one of the largest company in this industry . in 2011 Acxiom recorded $1.1 billion in sales. The industry a whole is a $300 billion a year industry. The industry has also helped the job sector as well. The industry employs 3 million people in the United States.

New Media's Influence on Productivity

New media both enhances and inhibits workplace productivity in a number of ways.

One way in which social media improves productivity in the workplace is by making it easier to communicate over long distances. This can be as simple as emailing a colleague across the hall and saving a few minutes, to video conferencing with partners in another country and saving dozens if not hundreds of hours of travel time, as well as thousands of dollars. Another way new media improves productivity in the workplace is through enabling a higher degree of interactions between employers and their employees. Before new media are used in the workplace, it would be very difficult and time-consuming for employers to constantly check with their employees, especially when the company is large. Nowadays, social media as well as sophisticated HR software can monitor employees satisfaction and quickly address areas for improvements. Though new media enables people to communicate digitally, thus saving time and efforts, it can also help people communicate more effectively in real life. Corporate software now exists that tracks where employees are most likely to go within the office, and who they are most likely to socialize with. Utilizing this software, companies can organize their offices and departments to be most conducive to the way in which every person prefers to socialize, as well as most conducive to meeting the right new people and building strong business relationships.

However, new media could have negative impacts in productivity as well. The biggest way in which new media decreases productivity in the workplace is through social media. The frequency with which office employees log in and participate in social media during work hours has a noticeable effect on the overall productivity of both the employee and the company. While many companies have opted to block social media sites on their computers , many employees turn to their phones to simply access social media there instead. A more cooperative approach that some companies have taken is to take some time to educate their employees on responsible usage of social media in and out of work. By working with employees instead of against them, companies foster a work environment that encourages people to want the company to succeed, rather than create distance between employers and employees by treating employees like children with blocking software. Another way in which productivity in the workplace can be lowered by new media is that companies rely too heavily on media to communicate with their employees. While communications software can reach more people in a shorter amount of time, building trust through face-to-face interaction is key to employee satisfaction and productivity. Therefore, striking a balance between the use of media and the absence of it is crucial to a productive work environment in the 21st century.

Social Media and the Economy

How does social media influence the economy? Before social media are used, companies have to pay certain traditional advertising companies or use other marketing strategies in order for customers to get to know their brands. And sometimes, those traditional advertising methods could not reach the target markets and clients. Nowadays, since social media have become extremely popular globally, any person or company can build his own brand through social media. Anyone who has access to the Internet will be potential customers to those companies. Usually, social media is less costly in advertisement than any other traditional methods. Some companies may not have enough budget to spend on marketing. Thus, a cost-effective or economic way is used by utilizing social media as free platforms. Companies can create their own digital media contents and post the material on social media. This way, viewers are able to see what those companies post and what information they try to convey. And this is how new customers are attracted by those companies.

The popularity of social media allow any personal or business brands to be spread rapidly and widely. As users spend as many as about 9 hours a day online, social media became one of the most effective way for companies to get new clients and customers around the world wherever there is Internet available. Also, social media provide platforms for the interactions of the companies and the customers. On one hand, customers can post comments or reviews of the company through social media. On the other hand, the company can reply to customer reviews and provide better customer services if there are complains by customers. Thus, better company-customer relationships are built because of the in-time feedback. Companies will not only save money, but also save time as well as promote better business development.

At the same time, social media help the global economy by creating new jobs. Since the role of social media play in economy becomes more and more important, new types of jobs like social media managers have been created. Users often rely on social media in their decision making, such as looking for latest fashion trends, online shopping, etc. Jobs related to social media maintaining are necessary and therefore have been created.Social media help in the professional fields as well. LinkedIn is one of the best known social media that is specialized in professional job seeking. With social media like LinkedIn, people are able to find jobs much easier because they can compare salaries, benefits,comments from others by using the platform. Also, professionals can share their knowledge and experience to other job seekers, which will facilitate the process of hiring for employers and job seeking for employees.

Also, in workplaces, social media are used across different offices by employees to communicate with each other, which forms a new way of office communication comparing to what it was without new media. With Facebook Messenger, WhatsApp and other social network, employees are able to communicate with each other effectively and efficiently. However, some employers are concerned about the isolation of employees in the office and ban the usage of social media at work, since employees tend to enjoy using social media to communicate instead of talking to each other.

Social media influence the economy in many ways. Social media change the way how companies conduct their businesses, how companies build better relationships with customer and build better branding, and how people communicate with each other in the business world. Also, social media facilitate job creations, which is good for the employment rate and the economy. Furthermore, social media connect the world via Internet and in a way promoting the development of the economy globally.

Bitcoin, Economics and New Media

Bitcoin Logo

The face and brand of the virtual currency

Overview

Bitcoin (BTC) became one of the newest combinations between new media and economics due to the economic crisis of 2008. Bitcoin is known as the world's "first decentralized currency". The revolutionary virtual currency has mysterious roots that trace back to the Japanese hacker, or group of hackers (still not known), Satoshi Nakamoto in January of 2009. While it has been approximately 5 years since inception, the currency is still in its infancy and is slowly being adopted into mainstream business and economics. The currency is currently trading at all-time highs of approximately $1,040 (subject to change over time).

Unlike traditional currencies, which are issued by banks, Bitcoin has no monetary authority. This means Bitcoin not not require any financial intermediaries such as banks when making transactions. Instead, Bitcoin uses a peer-to-peer computer network made up of the users' machine which is similar to the networks that underpin BitTorrent and Skype. Inflation is impossible. Bank transfer fees are gone.

Satoshi Nakamoto has only created a supply of 21,000,000 Bitcoins, however, all of them haven’t been released to the public. However, each Bitcoin can be divided into as small as one hundredth million of a Bitcoin, which is called a “Satoshi”. In order to obtain a Bitcoin, one must go through a process referred to as mining. This involves inputting a complicated sequence of algorithms until one finally goes through and a Bitcoin is created. Until recently the value of the virtual currency has largely been based of speculation, however as vendors and investors begin to accept its place in the word, the usage and acceptance of the currency has gained as well. Unlike a stock, users and investors of Bitcoin can actually influence its value by spending it or pushing to open up the outlets for the currency.

Anonymity

Bitcoin is often described as an anonymous currency because it is possible to send and receive bitcoins without giving any personally identifying information.Bitcoin is pseudonymous. Sending and receiving bitcoins is like writing under a pseudonym. If an author’s pseudonym is ever linked to their identity, everything they ever wrote under that pseudonym will now be linked to them. In Bitcoin, your pseudonym is the address to which you receive Bitcoin. Every transaction involving that address is stored forever in the blockchain. If your address is ever linked to your identity, every transaction will be linked to you. One way to increase your anonymity is to use multiple wallets. This is like maintaining multiple separate identities. The easiest way to maintain multiple wallets is to use MultiBit.

Vendor Acceptance

Initially one of the main outputs for Bitcoin was the infamous website, Silk Road. The website was taken down by federal officials in the fall of 2013 as it became a method for importing contraband and illegal substances. Because the privacy surrounding Bitcoins is so high, it is more appealing as it is harder to track the consumer or vendor where the currency is exchanging hands. The lack of government regulation in the exchange is one of the main benefits and appealing factors behind the currency. However as it gains traction many have become weary of increasing government regulation, specifically in the form of raids on database information. Today an increasing number of online and brick-and-mortar retailers are beginning to look to Bitcoin as a form of currency. It does hold an advantage as the value rises and at the same time, it comes with privacy from federal regulators. One pub in Manhattan has laid out the groundwork by becoming one of the first establishments to accept Bitcoin for food and beverages. EVR NYC uses cellphones and web developed applications to process the transactions and send Bitcoin into personal accounts. In 2014, there are now two publicly traded companies with core operations involved with Bitcoin. The Bitcoin Shop, Inc. (Ticker: BTCS) is an e-commerce site affiliated with Amazon that accepts Bitcoins as payment. The company has more than 120,000 items for sale across 400 different categories, including books, sporting gear, electronics, and toys. WPCS International (Ticker: WPCS) was originally a communications infrastructure contractor, but now is developing a complex Bitcoin trading platform. The Bitcoin trading platform is intended to be a game changer for the industry, as it will be designed to model a traditional stock trading platform with real-time quotes and exchanges.

Online Exchanges

Online Bitcoin exchanges resemble traditional stock trading platforms that allow users to buy and sell Bitcoins. There are over 70 difference Bitcoin exchanges that each follow different regulations depending on location. The largest US-based exchange is CampBX and the largest Bitcoin exchange in the world is BTC China. Mt. Gox was once the largest Bitcoin exchange in the world until it filed for bankruptcy on February 28, 2014.

Mt. Gox

Trading graph and price fluctuation as see on Mt. Gox

Mt. Gox was once synonymous with Bitcoin trading, as it was virtually the largest exchange used by investors/users of Bitcoin. The exchange is based out of Tokyo and, like the virtual currency, it too was created in 2009. The exchange was originally founded by Jed McCaleb, however, was later sold off to Tibanne Ltd. in March of 2011. Originally Mt. Gox was created to serve the purpose as an exchange for trading cards, such as animation or sports memorabilia. Since its inception, Mt. Gox had faced difficulty for regulatory purposes. Lapses in security, trading delays, and withdrawal delays led to early intervention from United States authorities. On February 7, 2014, Mt. Gox halted all withdrawal as it discovered that cyber attackers were repeatedly withdrawing Bitcoins with fake receipts. On February 28, 2014, Mt. Gox filed for bankruptcy as it lost about 700,000 of its user's bitcoin and $100,000 of its own. With Bitcoin valued at $565 at the time, Mt. Gox lost about $480 million dollars. Because Mt. Gox did not deal with the same regulations of Wall Street and holdings were not FDIC insured, most investors lost their cash holdings and Bitcoin.

Outraged investors of Mt. Gox trading platform

Social Movement

The following behind Bitcoin has created a social phenomenon trailing cities around the world. Today users can tap into social networks that have been formed by users and pioneers of Bitcoin, inorder to make better use of their investments. Today communities are striving to bring together users so they can first educate them on the idea and philosophy behind Bitcoin, and then go on to eventually make them users of Bitcoin. One organization in particular, Satoshi Square, is a group of individuals who meet frequently around Union Square in Manhattan, New York City and hold meetings ranging from a variety of topics and goals- all related around Bitcoin.

The movement serves as an epitome of how new media can create a community involving a collaborative effort and a communal environment. At the same time, developers around the world are constantly working on technology that can integrate Bitcoin into everyday business and make it easier for businesses to accept the currency and for users to access it. Bitcoin users come together in various events, often focusing on how to implement the currency into the mainstream population.

Security Issues

Arguably, one of the largest problems facing the existence of Bitcoin is the issue of security relating to the currency. Initially, when Bitcoins are mined, they are to be stored in a simple hard drive, therefore, if anyone were to lose the hard drive or have it stolen, there is no insurance or backup protection and the asset is simply lost. Some companies have made the initiative to create storage services for Bitcoin users and protecting the asset for them, however, nothing prevents them from being hacked or stealing the currency themselves.

On the second phase, the origins of Bitcoin are unknown, and therefore it is unsure whether or not a backdoor to the currency exists. It may even be possible that Satoshi Nakamoto has the ability to wipe out quantities of the currency and not only destroying the millions that have been invested by users but depressing the entire industry.