Understanding How The Internet Works Information Technology Essay

The Internet has been around since the early 1970s. It was the name given to the system that connected together the computers of various Military Institutions, select group of research laboratories, commercial companies and universities through dedicated leased 1ines. With the advent of newer and. faster computers, organizations conducting research and/or active commercial development, felt a greater need to communicate data to their concerns, through some fast, reliable network system. Therefore, slowly and steadily, more and more organizations (specifically, computers) were connected to the Inter net.

In the early 1980’s with the evolution of mini-computers, and the emerging IBM desktop personal computer, the need to connect systems was growing at a remarkable pace and consequently by late 1980’s, literally hundreds of thousands of computers were connected to the Internet. It was virtually becoming a seemingly impossible task to determine exactly how many computers were communicating on the Internet. To further strengthen the cause of this promising network, countries outside the United States were also busy setting up their own internal networks and were getting connected to the Internet backbone. Suddenly, the vast distances that information once had to travel with aids such as the facsimile, telex and even the courier service were short-circuited by the Internet. Here, information traveled at nearly the speed of light, finding the least busy gateway to its destination, ensuring that the message was fully intact by using error correction techniques, employing etiquette’s by compressing itself so as to create more room on the network for more data traffic and once reaching its destination, informing its source, that it has safety reached its intended place and with complete message intact. The system was also intelligent enough to know exactly when and where an error has occurred when the data which was sent did not reach its destination.

What is Internet?

Internet is a computer-based worldwide information networks. The Internet is composed of a large number of smaller interconnected networks. These networks may link tens, hundreds, or thousands of computers, enabling them to share information with each other and to share various resources, such as powerful supercomputers and databases of information. The Internet has made it possible for people all over the world to effectively and inexpensively communicate with each other. Unlike traditional broadcasting media, such as radio and television, the Internet is a decentralized system. Each connected individual can communicate with anyone else on the Internet, can publish ideas, and can sell products with a minimum overhead cost. The Internet has brought new opportunity for businesses to offer goods and services online. In the future, it may have an equally dramatic impact on higher education as more universities offer Internet-based courses.

The networks from which the Internet is composed are usually public access networks, meaning that the resources of the network can be shared with anyone logging on to, or accessing, the network. Other types of networks, called intranets, are closed to public use. Intranets are the most common type of computer network used in companies and organizations where it is important to restrict access to the information contained on the network.

How the Internet Works?

The Internet is based on the concept of a client-server relationship between computers, also called client/server architecture. In a client/server architecture, some computers act as information providers (servers), while other computers act as information receivers (clients). The client/server architecture is not one-to-one-that is, a single client computer may access many different servers, and a single server may be accessed by a number of different client computers. Prior to the mid-1990s, servers were usually very powerful computers such as mainframe or supercomputers, with extremely high processing speeds and large amounts of memory. Personal computers and workstations, however, are now capable of acting as Internet servers due to advances in computing technology. A client computer is any computer that receives information from a server. A client computer may be a personal computer, a pared-down computer (sometimes called a Web appliance), or a wireless device such as a handheld computer or a cellular telephone.

To access information on the Internet, a user must first log on, or connect, to the client computer’s host network. A host network is a network that the client computer is part of, and is usually a local area network (LAN). Once a connection has been established, the user may request information from a remote server. If the information requested by the user resides on one of the computers on the host network, that information is quickly retrieved and sent to the user’s terminal. If the information requested by the user is on a server that does not belong to the host LAN, then the host network connects to other networks until it makes a connection with the network containing the requested server. In the process of connecting to other networks, the host may need to access a router, a device that determines the best connection path between networks and helps networks to make connections.

Once the client computer makes a connection with the server containing the requested information, the server sends the information to the client in the form of a file. A special computer program called a browser enables the user to view the file. Examples of Internet browsers are Mosaic, Netscape, and Internet Explorer. Multimedia files can only be viewed with a browser. Their pared-down counterparts, text-only documents, can be viewed without browsers. Many files are available in both multimedia and text-only versions. The process of retrieving files from a remote server to the user’s terminal is called downloading.

Accessing the Internet

Access to the Internet falls into two broad categories: dedicated access and dial-up access. With dedicated access, the computer is directly connected to the Internet via a router, or the computer is part of a network linked to the Internet. With dial-up access, a computer connects to the Internet with a temporary connection, generally over a telephone line using a modem-a device that converts a computer’s digital signals into signals that can be transmitted over traditional telephone lines. Digital signals are made up of discrete units, while most telephone lines are analog, meaning that they carry signals that are continuous instead of discrete. Once a signal has traveled over the telephone line, a second modem is required at the other end of the line to reconvert the transmitted signals from analog to digital. Great many companies, called Internet Service Providers (ISPs), provide dial-up or dedicated access to the Internet for a modest fee. Examples of ISPs are America Online (AOL), the Microsoft Network (MSN), and CompuServe.

Today’s User

Today, with the evolution of the desktop personal computers which now pack the processing power of the mini’s and main frames of the late 70’s and early80’s and are still’ growing more powerful rivaling the processing power of the workstation, PC’s have taken a new turn in their applications. Gone are the days when PC’s were being used for mediocre word processing, small scale accounting on a spreadsheet or standalone databases. Users are now programming and creating their own applications. For instance, use of graphical software is on an exponential rise, desktop publishing is being sought after, and various management tools are being employed.

Nowadays, the average user of computers has become much more demanding. The world has become much more computer literate, and whether one likes it or not, computers have either already invaded our life or is about to. It is inevitable that in the next five years there will not be a person who has, not come across a computer.

Need for a Global Communication System

The need to communicate is expanding. People from ordinary walks of life to hard core computer users, are communicating with each other electronically. More and more databases are coming on line. Information from relatively simple services such as electronic mail to reading research articles by some physicist thousands of miles away are all available on line which has facilitated the user to achieve tasks in no time only through the courtesy of the Internet.

What is Money?

At first sight the answer to this question seems obvious; the man or woman in the street would agree on coins and banknotes, but would they accept them from any country? What about cheques? They would probably be less willing to accept them than their own country’s coins and notes but bank money (i.e. anything for which you can write a cheque) actually accounts for by far the greatest proportion by value of the total supply of money. What about I.O.U.s (I owe you), credit cards and gold? The gold standard belongs to history but even today in many rich people in different parts of the world would rather keep some of their wealth in the form of gold than in official, inflation-prone currencies. The attractiveness of gold, from an aesthetic point of view, and its resistance to corrosion are two of the properties which led to its use for monetary transactions for thousands of years. In complete contrast, a form of money with virtually no tangible properties whatsoever – electronic money – seems set to gain rapidly in popularity.

All sorts of things have been used as money at different times in different places. The alphabetical list below, taken from page 27 of A History of Money by Glyn Davies, includes but a minute proportion of the enormous variety of primitive moneys, and none of the modern forms.

Amber, beads, cowries, drums, eggs, feathers, gongs, hoes, ivory, jade, kettles, leather, mats, nails, oxen, pigs, quartz, rice, salt, thimbles, umiacs, vodka, wampum, yarns, and zappozats (decorated axes).

It is almost impossible to define money in terms of its physical form or properties since these are so diverse. Therefore any definition must be based on its functions.

Functions of Money

Specific functions (mostly micro-economic)

Unit of account (abstract)

Common measure of value (abstract)

Medium of exchange (concrete)

Means of payment (concrete)

Standard for deferred payments (abstract)

Store of value (concrete)

General functions (mostly macro-economic and abstract)

Liquid asset

Framework of the market allocative system (prices)

A causative factor in the economy

Controller of the economy

Causes of the Development of Money

Money originated very largely from non-economic causes: from tribute as well as from trade, from blood-money and bride-money as well as from barter, from ceremonial and religious rites as well as from commerce, from ostentatious ornamentation as well as from acting as the common drudge between economic men.”

One of the most important improvements over the simplest forms of early barter was the tendency to select one or two items in preference to others so that the preferred items became partly accepted because of their qualities in acting as media of exchange. Commodities were chosen as preferred barter items for a number of reasons – some because they were conveniently and easily stored, some because they had high value densities and were easily portable and some because they were durable. These commodities, being widely desired, would be easy to exchange for others and therefore they came to be accepted as money.

To the extent that the disadvantages of barter provided an impetus for the development of money that impetus was purely economic but archaeological, literary and linguistic evidence of the ancient world and the tangible evidence of actual types of primitive money from many countries demonstrate that barter was not the main factor in the origins and earliest development of money.

The Invention of Banking and Coinage

The invention of banking preceded that of coinage. Banking originated in Ancient Mesopotamia where the royal palaces and temples provided secure places for the safe-keeping of grain and other commodities. Receipts came to be used for transfers not only to the original depositors but also to third parties. Eventually private houses in Mesopotamia also got involved in these banking operations and laws regulating them were included in the code of Hammurabi.

In Egypt too the centralization of harvests in state warehouses also led to the development of a system of banking. Written orders for the withdrawal of separate lots of grain by owners whose crops had been deposited there for safety and convenience, or which had been compulsorily deposited to the credit of the king, soon became used as a more general method of payment of debts to other persons including tax gatherers, priests and traders. Even after the introduction of coinage these Egyptian grain banks served to reduce the need for precious metals which tended to be reserved for foreign purchases, particularly in connection with military activities.

Precious metals, in weighed quantities, were a common form of money in ancient times. The transition to quantities that could be counted rather than weighed came gradually. On page 29 of A History of Money Glyn Davies points out that the words “spend”, “expenditure”, and “pound” (as in the main British monetary unit) all come from the Latin “expendere” meaning “to weigh”. On page 74 the author points out that the basic unit of weight in the Greek speaking world was the “drachma” or “handful” of grain, but the precise weight taken to represent this varied considerably, for example from less than 3 grams in Corinth to more than 6 grams in Aegina. Throughout much of the ancient world the basic unit of money was the stater, meaning literally “balancer” or “weigher”. The talent is a monetary unit with which we are familiar with from the Parable of the Talents in the Bible. The talent was also a Greek unit of weight, about 60 pounds.

Many primitive forms of money were counted just like coins. Cowrie shells, obtained from some islands in the Indian Ocean, were a very widely used primitive form of money in fact they were still in use in some parts of the world (such as Nigeria) within living memory. “So important a role did the cowrie play as money in ancient China that its pictograph was adopted in their written language for money.” (page 36) Thus it is not surprising that among the earliest countable metallic money or “coins” were “cowries” made of bronze or copper, in China.

In addition to these metal “cowries” the Chinese also produced “coins” in the form of other objects that had long been accepted in their society as money e.g. spades, hoes, and knives. Although there is some dispute over exactly when these developments first took place, the Chinese tool currencies were in general use at about the same time as the earliest European coins and there have been claims that their origins may have been much earlier, possibly as early as the end of the second millennium BC. The use of tool coins developed (presumably independently) in the West. The ancient Greeks used iron nails as coins, while Julius Caesar regarded the fact that the ancient Britons used sword blades as coins as a sign of their backwardness. (However the Britons did also mint true coins before they were conquered by the Romans).

These quasi-coins were all easy to counterfeit and, being made of base metals, of low intrinsic worth and thus not convenient for expensive purchases. True coinage developed in Asia Minor as a result of the practice of the Lydians, of stamping small round pieces of precious metals as a guarantee of their purity. Later, when their metallurgical skills improved and these pieces became more regular in form and weight the seals served as a symbol of both purity and weight. The first real coins were probably minted some time in the period 640 – 630 BC. Afterwards the use of coins spread quickly from Lydia to Ionia, mainland Greece, and Persia.

Paper Money

In China the issue of paper money became common from about AD 960 onwards but there had been occasional issues long before that. A motive for one such early issue, in the reign of Emperor Hien Tsung 806-821, was a shortage of copper for making coins. A drain of currency from China, partly to buy off potential invaders from the north, led to greater reliance on paper money with the result that by 1020 the quantity issued was excessive, causing inflation. In subsequent centuries there were several episodes of hyperinflation and after about 1455, after well over 500 years of using paper money, China abandoned it.

Bills of Exchange

With the revival of banking in Western Europe, stimulated by the Crusades, written instructions in the form of bills of exchange came to be used as a means of transferring large sums of money and the Knights Templars and Hospitallers functioned as bankers. (It is possible that the Arabs may have used bills of exchange at a much earlier date, perhaps as early as the eighth century). The use of paper as currency came much later.

Goldsmith Bankers

During the English Civil War, 1642-1651, the goldsmith’s safes were secure places for the deposit of jewels, bullion and coins. Instructions to goldsmiths to pay money to another customer subsequently developed into the cheque (or check in American spelling). Similarly goldsmiths’ receipts were used not only for withdrawing deposits but also as evidence of ability to pay and by about 1660 these had developed into the banknote.

Virginian Tobacco

In England’s American colonies a chronic shortage of official coins led to various substitutes being used as money, including, in Viriginia, tobacco, leading to the development of paper money by a different route. Tobacco leaves have drawbacks as currency and consequently certificates attesting to the quality and quantity of tobacco deposited in public warehouses came to be used as money and in 1727 were made legal tender.

Gold Standard

Although paper money obviously had no intrinsic value its acceptability originally depended on its being backed by some commodity, normally precious metals. During the Napoleonic Wars convertibility of Bank of England notes was suspended and there was some inflation which, although quite mild compared to that which has occurred in other wars, was worrying to contemporary observers who were used to stable prices and, in accordance with the recommendations of an official enquiry Britain adopted the gold standard for the pound in 1816. For centuries earlier silver had been the standard of value. The pound was originally an amount of silver weighing a pound. France and the United States were in favor of a bimetallic standard and in 1867 an international conference was held in Paris to try and widen the area of common currencies based on coins with standard weights of gold and silver. However when the various German states merged into a single country in 1871 they chose the gold standard. The Scandinavian countries adopted the gold standard shortly afterwards. France made the switch from bimetallism to gold in 1878 and Japan, which had been on a silver standard, changed in 1897. Finally, in 1900, the United States officially adopted the gold standard.

With the outbreak of the First World War in 1914 Britain decided to withdraw gold from internal circulation and other countries also broke the link with gold. Germany returned to the gold standard in 1924 when it introduced a new currency, the Reichsmark and Britain did the following year, and France in 1928. However the British government had fixed the value of sterling at an unsustainably high rate and in the worldwide economic crisis in 1931 Britain, followed by most of the Commonwealth (except Canada) Ireland, Scandinavia, Iraq, Portugal, Thailand, and some South American countries abandoned gold.

The United States kept the link to gold and after the Second World War the US dollar replaced the pound sterling as the key global currency. Other countries fixed their exchange rates against the dollar, the value of which remained defined in terms of gold. In the early 1970s the system of fixed exchange rates started to break down as a result of growing international inflation and the United States abandoned the link with gold in 1973.

Intangible Money

The break with precious metals helped to make money a more elusive entity. Another trend in the same direction is the growing interest in forms of electronic money from the 1990s onwards. In some ways e-money is a logical evolution from the wire transfers that came about with the widespread adoption of the telegraph in the 19th century but such transfers had relatively little impact on the everyday shopper.

The evolution of money has not stopped. Securitization, the turning of illiquid assets into cash, developed in new directions in the 1990s. One much publicized development was the invention of bonds backed by intangible assets such as copyright of music, e.g.Bowie bonds, named after those issued by the pop star David Bowie.

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