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DAILY
CLASS NOTES
Science and Technology

Lecture – 03
Information Technology
(Part - 03)
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Information Technology (Part - 03)

Q. With reference to following statements:
1. Bluesnarfing is the unauthorized access of information from a wireless device through a Bluetooth
connection
2. Bluejacking grants limited access to send messages and ads causing low risk of data theft.
3. Bluebugging is a hacking method where an attacker exploits device's Bluetooth to gain full access
control of the device and pose high risk of data theft
Select the correct answer using the code given below.
(a) 1 and 2 (b) 2 and 3
(c) 1, 2 and 3 (d) None
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Artificial Intelligence
❖ Artificial Intelligence describes the action of machines
accomplishing tasks that have historically required
human intelligence.
❖ Example: Facebook’s list of suggested friends,
Upcoming sale of the favorite brand of shoes and
clothes
❖ AI: Artificial intelligence (AI) is a field of computer
science that deals with the creation of intelligent
agents, which are systems that can reason, learn,
and act autonomously. Here, machine mimics human
intelligence.
❖ ML: Machine learning (ML) is a subset of AI that allows software applications to become more accurate in
predicting outcomes without being explicitly programmed to do so. It improves with experience by itself.
❖ DL: Deep learning (DL) is a type of machine learning that uses artificial neural networks to learn from
data. They are made up of layers of interconnected nodes, and each node performs a simple
computation. Deep learning algorithms are able to learn complex patterns from data, and they are often
used to solve problems that are difficult or impossible to solve with other machine learning techniques.
Neural Networks:
❖ Neural networks, inspired by the human brain, are made up of interconnected nodes called neurons.
❖ RNNs (recurrent neural networks) are a type of neural network that are particularly well-suited for tasks that
involve sequence data, such as text and speech.
❖ RNNs have a memory that allows them to learn from previous inputs and generate outputs that are consistent
with that history.
Applications of Machine Learning and Deep Learning:
❖ Medical Imaging: Machine learning and deep learning algorithms are being used to develop new and
improved methods for medical imaging analysis. For example, these algorithms can be used to detect
tumors and other abnormalities in medical images, such as X-rays, MRI scans, and CT scans.
❖ Marketing: Machine learning and deep learning algorithms are being used to develop new and improved
methods for marketing and sales. For example, these algorithms can be used to predict customer demand, to
segment customers into different groups, and to personalize marketing messages.
❖ Industrial Robotics: Machine learning and deep learning algorithms are being used to develop new and
improved industrial robots. For example, these algorithms can be used to train robots to perform complex
tasks, such as assembly and welding.
❖ Self-driving Cars: Machine learning and deep learning algorithms are being used to develop self-driving
cars. These algorithms are used to train the cars to perceive their surroundings, to make decisions, and to
control the car's movement.
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❖ Customer Sentiment Analysis: Machine learning and deep learning algorithms can be used to analyze
customer reviews and gain insights about their sentiments.
❖ E-commerce Recommendation Systems: Deep learning-based recommendation systems can be used to
provide insights to customers based on their purchasing patterns. For example, these systems can
recommend products to customers that they are likely to be interested in.
Applications of AI:
Agriculture:
❖ AI Helping Analyze Farm Data: AI can be used to analyze a variety of data from farms, including weather
data, soil data, and crop data. This analysis can help farmers to make better decisions about planting,
irrigation, fertilization, and pest control.
❖ Use in precision agriculture: AI is being used in precision agriculture to improve the efficiency and
effectiveness of agricultural practices. For example, AI sensors can be used to detect and target weeds,
which can help to reduce the use of herbicides and pesticides.
❖ Chatbots for Assistance: Chatbots can be used to provide farmers with assistance with a variety of tasks,
such as answering questions, providing advice, and scheduling appointments.
Manufacturing:
❖ Decision support systems for inventory control, demand prediction: AI can be used to develop decision
support systems that can help manufacturers to make better decisions about inventory control and demand
prediction.
Services:
❖ Smart chatbot for customer support: AI chatbots can be used to provide customer support 24/7. These
chatbots can answer customer questions, resolve issues,
and provide information about products and services.
❖ Early fraud detection: AI can be used to develop
systems that can detect fraud early on. This can help
businesses to reduce losses and protect their customers.
Health:
❖ Automated Diagnostics: AI can be used to develop
systems that can automate the diagnosis of diseases. This
can help doctors to diagnose diseases more accurately
and quickly.
❖ Early warning of disease outbreak: AI can be used to develop systems that can detect disease outbreaks
early on. This can help to prevent the spread of diseases and to save lives.
❖ Faster development of new vaccines/medicine: AI can be used to accelerate the development of new
vaccines and medicines.
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Education:
❖ Personalized course module for each student as per need: AI can be used to personalize course modules
for each student based on their individual needs and learning style.
Mobility:
❖ Self-driving cars: AI is being used to
develop self-driving cars. Self-driving
cars have the potential to improve
transportation safety and efficiency.
❖ Smart traffic signal to reroute heavy
traffic: AI can be used to develop
smart traffic signals that can reroute
heavy traffic and reduce congestion.
This can help to improve traffic flow and reduce travel times.
Issues With AI:
❖ Legal Issues: It can be difficult to fix liability when a law is broken by an AI system.
❖ Inequality: AI is likely to increase economic inequality, as skilled workers will be able to use AI to become
more productive, while unskilled workers may lose bargaining power as their jobs are automated.
❖ Misuse: AI can be misused for malicious purposes, such as creating deepfakes to malign political opponents
or create social unrest.
❖ Surveillance: AI makes mass surveillance practical by using public cameras, telephone conversations, and
written communications. This raises concerns about privacy and individual liberties.
❖ AI Takeover: Some experts have warned that advanced AI systems could eventually become so intelligent
that they pose a threat to humanity.
❖ Ethical Issues:
➢ Livelihood: AI is replacing humans in many jobs, which could lead to widespread unemployment.
➢ Bias: AI systems can learn social biases, such as racism, casteism, and communalism. This can lead to
AI systems that are unfair and discriminatory. For example, Microsoft had to shut down its chatbot Tay
after it learned racist and sexist language from Twitter users.
➢ Weapons: AI can be used to develop lethal autonomous weapons that can kill without human
intervention. This raises concerns about the potential for AI-powered weapons to be used in wars and
conflicts.
Challenges of AI:
❖ Regulatory: Finding the optimum level of regulation for AI is a challenge.
❖ Data Security: AI systems generally use a lot of data, which raises concerns about data security and
privacy. It is important to ensure that AI systems are used to fairly and ethically collect and use data.
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❖ Technological: Most computers commonly available have low computing power, and there are also fewer
supercomputers at the national level. This can limit the development and deployment of AI systems.
❖ Human Resource: There is a lack of talent to work on advanced AI technologies, despite having a large IT
manpower. This is because AI is a relatively new field, and it requires specialized skills and knowledge.
Steps Taken to Promote AI in India:
❖ AIRAWAT: The Government of India has launched the AIRAWAT (AI Research, Analytics and
Knowledge Assimilation platform), India's first AI-specific cloud computing infrastructure. This will help
researchers and businesses to develop and deploy AI solutions more easily. It is also expected to transform
sectors like education, health, agriculture, urbanization, and mobility.
❖ Centre of Excellence (CoE) in AI: The National Informatics Centre (NIC) has established a Centre of
Excellence in AI to develop AI solutions for NIC's projects. This will help to accelerate the adoption of AI
by government agencies.
❖ OECD (Organisation for Economic Co-operation and Development) Principles on AI: The Indian
government has endorsed the OECD Principles on AI, which promote AI that is trustworthy and respects
human rights and democratic values. This shows that the government is committed to responsible and ethical
development of AI.
❖ Steps taken to promote AI in the USA: In the USA, there is no comprehensive federal regulation of AI.
However, some tech giants, such as Google and Microsoft, have adopted their own self -regulatory
guidelines. These guidelines are intended to promote responsible and ethical development and use of AI.
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Generative Artificial Intelligence (AI):

❖ Generative artificial intelligence (AI) is a type of AI that can create new content, such as text, images, music,
and video. Generative AI models are trained on large datasets of existing content, and they learn to generate
new content that is similar to the training data.
❖ Recent advances in generative AI have led to the development of powerful new programs, such as ChatGPT,
BARD AI, DALL-E, Codex, and GPT-3. These programs are conversational AI language models based on
deep learning models built on the transformer architecture.
❖ They use deep neural networks and are trained on corpora of text data from the internet, allowing them to
generate human-like text and to perform various tasks, such as question answering and conversation.
❖ Generative artificial intelligence (AI) is a type of AI that can create new content, such as audio, code,
images, text, simulations, and videos with simple textual instructions known as Prompts.It is achieved by
training machine learning models on large amounts of data using neural networks and then using these
models to generate new, synthetic data that is similar to the already existing data.
❖ Some of the most prominent frameworks or models of generative AI include:
➢ Generative adversarial networks (GANs): GANs are a type of generative AI model that uses two
competing neural networks to generate new data. One neural network, called the generator, tries to
generate new data that is similar to the existing data. The other neural network, called the discriminator,
tries to distinguish between the real and generated data.
➢ Transformer-based models (TBMs): TBMs are a type of neural network architecture that is well-suited
for generative AI tasks. TBMs are able to learn long-range dependencies in data, which is important for
generating realistic and coherent content.
➢ Variational autoencoders (VAEs): VAEs are a type of generative AI model that learns a latent
representation of the data. VAEs can then be used to generate new data by sampling from the latent
representation.
LaMDA (Language Models for Dialog Applications):
❖ LaMDA (Language Models for Dialog Applications) is a machine learning language model created by
Google as a chatbot that is designed to mimic humans in conversation. It is built on Transformer, a neural
network architecture that Google invented and open-sourced in 2017.
❖ LaMDA is different from other language models, such as BERT and GPT-3, in that it is specifically
designed for conversation. It is able to generate text that is more natural and engaging, and it can also
understand and respond to complex questions.
❖ LaMDA is still under development, but it has already been used to create a variety of impressive
applications. For example, LaMDA has been used to create a chatbot that can provide customer support,
and it has also been used to create a chatbot that can help people with mental health issues.
Generative Adversarial Networks (GANs):
❖ Generative adversarial networks (GANs) are a type of machine learning model that can be used to generate
new data, such as images, text, and audio. GANs work by training two neural networks against each other:
➢ Generator: The generator learns to generate plausible data. The generated instances become negative
training examples for the discriminator.
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➢ Discriminator: The discriminator

learns to distinguish the generator’s
fake data from the real world. The
discriminator penalizes the generator
for producing implausible results.
➢ The generator and discriminator
networks are trained simultaneously,
and they compete with each other to
improve. The generator tries to
generate data that is good enough to
fool the discriminator, while the discriminator tries to become better at distinguishing between real and
generated data.
❖ Over time, the generator learns to generate increasingly realistic data, and the discriminator learns to become
more accurate at distinguishing between real and generated data.

GLOBAL PARTNERSHIP ON AI (GPAI)

Why in the News?
❖ India took over the Chair of Global Partnership on AI (GPAI) from France.
❖ This is the bridge between theory and practice.
❖ India is the founding member of this group.
❖ Secretariat is at OECD
Responsible AI for Youth 2022:
❖ The National E-Governance Division of the Ministry of Electronics & IT in collaboration with Intel India
launched the ‘Responsible AI for Youth 2022’ program.
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❖ This program is aimed at enabling school students with Artificial intelligence (AI) skills in an inclusive
manner through exclusive hands-on learning and mentorship opportunities.
❖ It is open to all school students studying in classes 8-12 across India.

Q. With the present state of development, Artificial Intelligence can effectively do which of the following?
(2020)
1. Bring down electricity consumption in industrial units
2. Create meaningful short stories and songs
3. Disease diagnosis
4. Text-to-speech conversion
5. Wireless transmission of electrical energy
Select the correct answer using the code given below:
(a) 1, 2, 3 and 5 only (b) 1, 3, and 4 only
(c) 2, 4, and 5 only (d) 1, 2, 3, 4 and 5

Difference Between ChatGPT and BARD :

CHATGPT BARD

❖ Founded by open-air ❖ Founded by Google

❖ launched in November 2022 ❖ Launched in March 2023

❖ Language model used by CHATGPT is GPT - 3, ❖ Language used by BARD is lambda

3.5, 4

DeepFake;
Deepfake refers to the use of artificial intelligence (AI) and deep learning techniques to create or manipulate
audiovisual content, often in a deceptive or misleading manner. These techniques can be used to superimpose
faces onto other bodies, manipulate speech, or create entirely fabricated content that appears authentic. While
deep fake technology has potential positive applications, such as in filmmaking or video game development, it
also raises significant concerns regarding misinformation, privacy, and the potential for misuse, such as spreading
false information or defaming individuals.
❖ The Information Technology (IT) Act of 2000 and the Copyright Act of 1957 are two key pieces of
legislation in India that can be relevant for the protection against deep fakes, albeit indirectly
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DeepFakes used for;

The Bletchley Declaration:

World first agreement on safe and responsible development of frontier AI
❖ 28 countries from across the globe and EU
❖ Identifying AI opportunities and risks.
❖ Building a shared understanding of these risks.
❖ International collaboration on science and research
Large Language Model:
❖ It is trained on a huge dataset and built on machine learning.
❖ Here the neural network used is the transformer model.
❖ For example, India AI knowledge portal. It is a joint venture of NASSCOM MeGD and Meity.
➢ Bhasini: Language translation of those languages which are included in 8th schedule of indian
constitution
➢ Indic Transliteration : It is a transformer based multilingual
➢ Indic Natural Language Generation.
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Dark patterns:
It refer to strategies employed by websites and apps to make users perform actions they did not intend to or
discourage behaviors that are not advantageous for the companies.
These patterns often exploit cognitive biases and employ tactics such as false urgency, forced actions, hidden
costs etc.
Types of Dark pattern:
The Consumer Affairs Ministry has identified nine types of dark patterns being used by e-commerce companies:
❖ False Urgency: Creates a sense of urgency or scarcity to pressure consumers into making a purchase or
taking an action;
❖ Basket Sneaking: Dark patterns are used to add additional products or services to the shopping cart without
the user's consent;
❖ Confirm Shaming: Uses guilt to make consumers adhere; criticizes or, attacks consumers for not conforming
to a particular belief or viewpoint;
❖ Forced Action: Pushes consumers into taking an action they may not take, such as signing up for a service in
order to access content;
❖ Nagging: Persistent criticism, complaints, and requests for action;
❖ Subscription traps: Easy to sign up for a service but difficult to quit or cancel; option is hidden or requires
multiple steps;
❖ Bait & Switch: Advertising a certain product/ service but delivering another, often of lower quality;
❖ Hidden costs: Hiding additional costs until consumers are already committed to making a purchase;
❖ Disguised ads: Designed to look like content, such as news articles user-generated content.
Big Data:
❖ Big data refers to data sets so large that conventional systems cannot process them
❖ In it a large amount of data which is of
structured, semi-structured or unstructured
nature.
❖ It also refers to the entire process of
gathering, storing, and analyzing that data.
❖ As per the study conducted by NASSCOM,
“the Indian analytics industry is predicted to
reach the $16 billion mark by 2025.”
❖ It is characterized by five V’s:
➢ Volume
➢ Variety
➢ Velocity
➢ Veracity
➢ Value
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Applications:
❖ Big data is a large and complex set of data that is difficult to process using traditional database management
tools. Big data has the potential to revolutionize many industries and aspects of our lives. Here are some
examples of how big data is being used today:
➢ For Policy Making: Big data can be used to understand the savings and expenditure patterns of the
population, which can help governments to develop better policies and programs. For example, the
government of India is using big data to develop a new poverty line.
➢ For targeted delivery of welfare schemes: Big data can be used to identify the beneficiaries of welfare
schemes, such as Aadhaar, more accurately and efficiently.
➢ To prevent market manipulations: Big data can be used to detect and prevent market manipulations,
such as insider trading and price rigging. For example, the Securities and Exchange Board of India
(SEBI) is using a data lake to collect and analyze data from various sources to detect and prevent
market manipulations.
➢ To catch income tax evaders: Big data can be used to identify income tax evaders. For example, the
Income Tax Department of India is using a project called Insight to identify high-risk taxpayers and to
conduct more effective audits.
➢ To improve competence of PSBs: Big data can be used to improve the competence of public sector
banks (PSBs). For example, the Economic Survey of India 2020 suggested the creation of a PSB
network on the lines of the Goods and Services Tax Network (GSTN) to improve the efficiency and
effectiveness of PSBs.
➢ To boost intelligence gathering: Big data can be used to boost intelligence gathering through
surveillance of communication systems. This can help to prevent crimes and terrorist attacks.
➢ Internet of Things (IoT): The IoT is a network of physical devices that are connected to the internet.
The IoT is expected to generate a huge amount of data, which can be used for a variety of purposes. For
example, the IoT can be used to improve traffic management, to reduce energy consumption, and to
monitor the environment.
Challenges of big data:
❖ Lack of data scientists: India has a shortage of data scientists, with less than 10% of the global supply.
❖ Security: Ensuring the security of huge amounts of data is difficult. Big data is often stored on cloud
servers, which can be vulnerable to cyberattacks. Additionally, big data is often collected from a variety of
sources, which can make it difficult to track and protect.
❖ Invasion of privacy: Big data analytics can lead to privacy concerns. For example, big data can be used to
track people's movements, spending habits, and online activity.
❖ Technical Challenges: There are a number of technical challenges associated with big data, such as
inefficient infrastructure for data collection and storage. Big data is often collected and stored in different
formats, which can make it difficult to analyze. Additionally, big data processing requires powerful
computers and software.
❖ Net Neutrality: the principle that internet service providers should enable access to all content and
applications regardless of the source, and without favoring or blocking particular products or websites.
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Steps Taken:
❖ NITI Aayog is developing ‘National Data & Analytics Platform’ as a single source for various data
❖ Big Data Management Policy’ drafted by CAG for auditing big data generated in the public sector.

Q. With reference to Al, Consider the following Al models:

1. Generative adversarial networks.
2. Transformer-based models
3. Variational autoencoders
How many of the models given above are correct?
(a) Only one (b) Only two
(c) All the above (d) None
Q. With reference to Artificial Intelligence, consider the following statements:
1. Machine learning (ML) is a subset of Al that allows software applications to become more accurate in
predicting outcomes.
2. Deep learning (DL) is a type of machine learning that uses artificial neural networks to learn from data.
Select the incorrect answer using the code given below.
(a) 1 only (b) 2 only
(c) Both 1 and 2 (d) None

What Are Drones?

Drones are aircraft that can fly without a human pilot on board. They are also known as unmanned aerial vehicles
(UAVs) or unmanned aircraft systems (UAS). Drones are remotely controlled by a pilot on the ground using a
radio control transmitter.
Drones can be divided into five categories based on their weight:
❖ Nano: Less than or equal to 250 grams.
❖ Micro: From 250 grams to 2kg.
❖ Small: From 2 kg to 25kg.
❖ Medium: From 25kg to 150kg.
❖ Large: Greater than 150kg
Applications of Drones:
❖ Defense: Drones can be used for reconnaissance and strike
missions. For example, the DRDO Rustam and the USA's
Predator drones are used for military purposes.
❖ Law enforcement: Drones can be used for crowd management and traffic control.
❖ Agriculture: Drones can be used to monitor crop health and to spray insecticides.
❖ Miscellaneous: Drones can be used to make GIS maps, to search for people after disasters, and to take
photographs.
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General Rules and Regulations for flying drones:

Drone Regulations in India:

❖ Drone regulations in India are issued by the Ministry of Civil Aviation.
❖ Drones are classified into five categories based on their weight: nano (<250 grams), micro (250 grams to
2kg), small (2 kg to 25kg), medium (25kg to 150kg), and large (>150kg).
❖ It is mandatory to register all drones except for nano drones.
❖ Before flying a drone, you must obtain permission from the Directorate General of Civil Aviation (DGCA).
This is known as the No Permission No Take-off (NPNT) rule.
❖ Drones can only be flown during the day, within visual line of sight of the pilot, and at a maximum altitude
of 400 feet.
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❖ Drones cannot carry any human or animal payloads, or anything hazardous.

❖ Indian airspace has been partitioned into three zones:
➢ Red Zone: Flying is prohibited in this zone.
➢ Yellow Zone: Flying is allowed in this zone, but permission from the Air Traffic Control (ATC) is
required.
➢ Green Zone: Flying is allowed in this zone without permission from the ATC.
National Counter Rogue Drone Guidelines:
❖ The National Counter Rogue Drone Guidelines were issued by the Ministry of Civil Aviation in 2019 to
handle the threats posed by Unmanned Aircraft Systems (UAS), also known as drones. The guidelines
outline three models to counter rogue drones, based on threat perception:
➢ Full-scale model: This model is for places like Rashtrapati Bhavan and Parliament House, where there
is a high threat of drone attacks. It includes detectors like radars and full countermeasures, such as radio
frequency jammers and kinetic weapons.
➢ Mid-segment model: This model is for places like power plants and oil refineries, where there is a
medium threat of drone attacks. It includes some countermeasures, such as radio frequency jammers
and visual detection systems.
➢ Basic model: This model is for important government offices, where there is a low threat of drone
attacks. It includes visual detection systems and basic countermeasures, such as drone nets and guns.
News:
❖ Saudi-Aramco Drone Attack – In Sept 2019, Drone attacks claimed by Yemen's Houthi rebels struck two
key oil installations inside Saudi Arabia
Methods to control drones:
❖ Sky fence: A sky fence is a system that uses radio frequency (RF) waves to disrupt the signals between a
drone and its pilot.
❖ Drone gun: A drone gun is a device that emits a high-powered RF signal that can jam the drone's
communication and navigation systems.
❖ Laser: A laser can be used to damage a drone's electronics or to overheat its components, causing it to crash.
❖ Net: A net can be thrown over a drone to catch it. This is a relatively low-tech solution, but it can be
effective.
❖ Bigger drone: A larger drone can be used to carry a net and catch a smaller drone. This is a more
sophisticated solution, but it is also more expensive.
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Q. Consider the following activities :

(2020)
1. Spraying pesticides on a crop field
2. Inspecting the craters of active volcanoes
3. Collecting breath samples from spouting whales for DNA analysis
At the present level of technology, which of the above activities can be successfully carried out by using
drones ?
(a) 1 and 2 only (b) 2 and 3 only
(c) 1 and 3 only (d) 1, 2 and 3

What are Cryptocurrencies?

Cryptocurrencies are digital currencies that are
secured by cryptography, which makes them
nearly impossible to counterfeit or double-
spend. These are digital representations of
value. They can be used to buy goods and
services online, and they can also be traded for
other currencies.
Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution
control.
Examples:
❖ Bitcoin: Bitcoin is the first and most popular cryptocurrency. It was created in 2009 by an anonymous
person or group of people under the name Satoshi Nakamoto.
❖ Ethereum: Ethereum is a decentralized, open-source blockchain platform that enables the development of
smart contracts and decentralized applications (dapps). It is the second -largest cryptocurrency by market
capitalization, after Bitcoin.
❖ Facebook Diem: Facebook Diem is a digital currency that is being developed by Facebook. It is not yet
available to the public.
❖ Ripple (XRP): Ripple (XRP) is a cryptocurrency that is designed to be used for fast and low-cost
international payments.
❖ Litecoin: Litecoin is a cryptocurrency that is similar to Bitcoin, but it offers faster transaction times.
Cryptocurrency:
❖ Peer to Peer Regulation: Cryptocurrencies are decentralized, meaning they are not subject to
government or financial institution control. This is because cryptocurrencies use a peer-to-peer network
to verify and record transactions. In a peer-to-peer network, all participants have an equal role in verifying
and recording transactions.
❖ BlockChain Technology: Blockchain technology is the underlying technology behind cryptocurrencies.
Blockchain is a distributed ledger system that records all transactions in a secure and tamper -proof
way.
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Cryptocurrency Mining:
Cryptocurrency mining is the process of verifying and adding transactions to a cryptocurrency ledger. Miners are
rewarded for their work with cryptocurrency.
Aspects of cryptocurrency mining:
❖ Data mining: Cryptocurrency mining involves using powerful computers to solve complex mathematical
problems.This process is called data mining.
❖ Cryptocurrency mining requires powerful computers that can perform a lot of calculations.
❖ Miners are rewarded with cryptocurrency for their work. The reward amount varies depending on the
cryptocurrency.
❖ Cryptocurrency is based on code. Miners use specialized software to mine cryptocurrency.
❖ Cryptocurrency is a digital currency. It does not exist in physical form.
❖ Cryptocurrency can be traded on exchanges for other currencies.
❖ Cryptocurrency can be used to buy goods and services.
Terms related to Crypto Mining:
❖ Proof of work: Proof of work is a consensus mechanism used by some cryptocurrencies, such as Bitcoin. In
proof of work, miners compete to solve complex mathematical problems. The first miner to solve a problem
is rewarded with cryptocurrency.
❖ Proof of stake: Proof of stake is a consensus mechanism used by some cryptocurrencies, such as Ethereum.
In proof of stake, miners stake their cryptocurrency in order to validate transactions. The more
cryptocurrency a miner stakes, the more likely they are to be selected to validate a transaction.
Virtual Currencies (VC):
They are larger umbrella terms for all forms of currencies traded online. There is no globally accepted definition.
Satoshi Nakamoto, founder of cryptocurrencies, defined bitcoin as a new electronic cash system. It is entirely
peer to peer regulation. Virtual currencies
Limited: Virtual currencies are still a relatively new technology, and they are not yet widely accepted. This
means that the number of places where you can use virtual currencies is limited.
❖ Larger umbrella term for all forms of currencies traded online: Virtual currencies are a type of digital
currency. However, the term "virtual currencies" is often used to refer to a wider range of digital assets,
including cryptocurrencies, fiat currencies, and central bank digital currencies (CBDCs).
❖ No globally accepted definition: There is no single definition of a virtual currency that is universally
accepted. Different countries and organizations have different definitions.
❖ Satoshi Nakamoto, the founder of cryptocurrencies, defined Bitcoin as a new electronic cash system.
Bitcoin is the first and most popular cryptocurrency. It was created in 2009 by an anonymous person or
group of people under the name Satoshi Nakamoto. The identity of Satoshi Nakamoto is unknown.
❖ Entirely peer-to-peer regulation: Virtual currencies are decentralized, meaning they are not subject to
government or financial institution control. This is because virtual currencies use a peer-to-peer network to
verify and record transactions. In a peer-to-peer network, all participants have an equal role in verifying and
recording transactions.
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The Advantages and Disadvantages of Cryptocurrency:

Advantages Disadvantages

❖ Easy to use: Cryptocurrency is easy to use and ❖ Volatility in value: The value of
understand. cryptocurrencies can be volatile, meaning that it
❖ Easy to store in digital mode: Cryptocurrency can change quickly and unpredictably.
can be easily stored in digital form on a computer ❖ Money supply management difficult-No
or smartphone. central authority: There is no central authority
❖ People get choice: People can choose to use that controls the money supply of
cryptocurrency instead of traditional fiat cryptocurrencies. This can make it difficult to
currencies. manage the money supply and prevent inflation.
❖ Difficult to counterfeit like physical currency: ❖ Difficult to regulate: Cryptocurrencies are
Cryptocurrency is difficult to counterfeit because difficult to regulate because they are
it is secured by cryptography. decentralized. This means that there is no single
❖ Highly secure with blockchain technology: government or financial institution that controls
Cryptocurrency is highly secure because it uses them.
blockchain technology to record transactions. ❖ Cyber frauds: Cryptocurrencies can be used for
❖ International usage: Cryptocurrency can be used cyber frauds, such as ransomware attacks.
internationally without having to go through a ❖ Misuse - Tax evasion, Money laundering:
bank or other financial institution. Cryptocurrencies can be used for illegal activities,
❖ Anti-Inflationary Currency: Cryptocurrency is such as tax evasion and money laundering.
often seen as an anti-inflationary currency ❖ Needs high energy (electricity) requirement in
because the supply of many cryptocurrencies is extraction: Cryptocurrency mining requires a lot
limited. of electricity, which can be harmful to the
environment.
❖ Irreversibility: Cryptocurrency transactions are
irreversible, meaning that they cannot be canceled
or reversed.

Cryptocurrency News:
❖ April 2018: The Reserve Bank of India (RBI) issued a circular prohibiting banks and non-banking financial
companies (NBFCs) from providing services related to virtual currencies (VCs).
❖ March 2020: The Supreme Court of India struck down the RBI's ban on VCs, ruling that they are not
commodities or real money.
❖ 2021: El Salvador became the first country in the world to adopt Bitcoin as legal tender.
❖ 2022: The Central African Republic became the second country to adopt Bitcoin as legal tender.
❖ India's cryptocurrency stance: India is still working on cryptocurrency regulations. The government has
said that it is open to supporting other cryptocurrencies, but it wants to avoid copying other countries'
regulations.
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Why are countries like the Central African Republic (CAR) adopting cryptocurrencies as legal tender?
❖ Strong and inclusive growth: CAR is one of the poorest and most economically fragile countries in the
world, with a population of 5 million. Cryptocurrencies have the potential to help CAR achieve strong and
inclusive growth by:
❖ Reducing inflation: Cryptocurrencies are often seen as an inflation-resistant asset class, as their supply is
limited. This makes them attractive to countries with high inflation rates, such as CAR.
❖ Promoting financial inclusion: Cryptocurrencies can be used by anyone with an internet connection,
regardless of their bank account status or financial history. This can help to promote financial inclusion in
countries like CAR, where a large portion of the population is unbanked.
❖ Boosting economic activity: Cryptocurrencies can help to boost economic activity by making it easier for
people to send and receive payments, both domestically and internationally.
❖ Positive growth: Cryptocurrencies have the potential to convert inflation-related decline from legal
currencies into positive growth. This is because cryptocurrencies are not subject to the same inflationary
pressures as fiat currencies. Additionally, cryptocurrencies can help to attract foreign investment and boost
the tourism industry.
❖ Reduce dependency on the other country: CAR does not have its own currency. Instead, it uses the
Central African CFA franc, which is pegged to the euro. By adopting Bitcoin as legal tender, CAR can
reduce its dependency on the euro and other foreign currencies.
❖ Circumvent the sanctions: CAR is subject to sanctions imposed by the United States and other countries.
Cryptocurrencies can help CAR to circumvent these sanctions by providing a way to send and receive
payments without going through the traditional banking system.
Issues Associated with Banning Decentralised Cryptocurrencies:
❖ Brain-drain: A blanket ban on cryptocurrencies in India would lead to an exodus of blockchain experts and
businesses from the country. After the RBI's 2018 ban on cryptocurrencies, many blockchain experts
moved to countries where crypto is regulated, such as Switzerland, Singapore, Estonia, and the US.
This brain drain would deprive India of the talent and expertise needed to develop and innovate in the
blockchain space.
❖ Deprivation of transformative technology: Blockchain technology is the underlying technology behind
cryptocurrencies. It is a distributed ledger technology that has the potential to revolutionize many industries,
including finance, healthcare, and supply chain management. By banning cryptocurrencies, India would
deprive itself of the opportunity to benefit from this transformative technology.
❖ Encouraging illegitimate use: Banning cryptocurrencies would drive them underground, making them
more difficult to track and regulate. This could encourage illegitimate use of cryptocurrencies for activities
such as money laundering and terrorist financing.
❖ Contradictory policies: A ban on cryptocurrencies would be inconsistent with the National Strategy on
Blockchain, 2021, which hailed blockchain technology as transparent, secure, and efficient. The ban would
also send a mixed message to the global community about India's commitment to innovation and
technological advancement.
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Way Forward:
❖ Regulation is the Solution
❖ Clarity on Cryptocurrency Definition.
❖ Strong KYC Norms
❖ Ensuring Transparency
❖ Creating Job Opportunities
❖ Igniting the Entrepreneurial Wave
SC Garg Committee Recommendations (2019):
❖ It recommended banning anybody who mines, holds, transact or deals with cryptocurrencies in any
form. The Union Budget 2022-2023 of India has also proposed to introduce a digital currency in the coming
financial year. It was also announced that "any income from transfer of any virtual digital asset shall be
taxed at the rate of 30%.
❖ As per the rules specified by the Indian government gains from all such crypto transactions are taxable at a
flat rate of 30%. These rules, introduced during the 2022 Union Budget, are governed by Section 115BBH
of the Income Tax Act, 1961.

CBDC or National Digital Currency:

❖ A central bank digital currency (CBDC) is a digital form of a country's fiat currency. It is issued by the
central bank of a country and is backed by the full faith and credit of the government.
❖ Instead of printing paper currency or minting coins, the central bank issues electronic tokens. These tokens
can be used to make payments online and in stores.
❖ The Digital Rupee (eINR or E-Rupee): The Digital Rupee is a tokenized digital version of the Indian
Rupee, issued by the Reserve Bank of India (RBI) as a central bank digital currency (CBDC). The Digital
Rupee was launched on 1 December 2022.
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Challenges in rolling out National Digital Currency:

❖ Potential cybersecurity threat: Digital currencies are vulnerable to cyberattacks, such as hacking and
malware. This could lead to theft of funds or disruptions to the system.
❖ Lack of digital literacy of the population: Many people, especially in developing countries, do not have
access to the internet or do not know how to use digital devices. This could make it difficult for them to use
a national digital currency.
❖ Challenges in regulation, tracking investment and purchase, taxing individuals, etc.: Digital currencies
can be difficult to regulate and track. This could make them attractive to criminals and could also make it
difficult for governments to tax individuals and businesses.
❖ Threat to Privacy: Digital currencies can be used to track people's spending habits. This could raise
concerns about privacy.

Q. With reference to Cryptocurrency, consider the following statements:

1. Bitcoin is the first and most popular cryptocurrency
2. Facebook Diem is a digital currency that is being developed by Facebook and is available to the public.
3. Ripple (XRP) is a cryptocurrency that is designed to be used for fast and low-cost international payments.
4. Litecoin is a cryptocurrency that is similar to Bitcoin, but it offers faster transaction times.
5 Ethereum is a decentralized, open-source blockchain platform that enables the development of smart
contracts and decentralized applications (dapps).
Which of the above statements are correct?
(a) Only two (b) Only three
(c) All of the above (d) None
Q. With reference to terms related to crypto mining, consider the following statements:
1. In proof of work, miners stake their cryptocurrency in order to validate transactions.
2. In proof of stake, miners compete to solve complex mathematical problems.
Which of the statements given above is/are correct?
(a) 1 only (b) 2 only
(c) Both 1 and 2 (d) None

What is the Dark Web?

❖ The dark web is a subset of the deep web that is only accessible through special software, such as the Tor
browser. It is hidden from conventional search engines and requires users to take specific steps to remain
anonymous.
❖ The dark web is often associated with illegal activities, such as drug trafficking and cybercrime. However, it
is also used by legitimate users for a variety of purposes, such as communicating with whistleblowers and
journalists, and accessing censored content.
Surface Web:
❖ The surface web is the part of the internet that is accessible to everyone. It is what most people think of
when they use the word "internet". The surface web includes websites that can be found through search
engines, such as Google and Bing.
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Deep Web:
❖ The deep web is the part of the internet that is not indexed by search engines. It includes websites and
databases that require authentication to access, such as email accounts, bank accounts, and medical records.
The deep web also includes websites that are intentionally hidden, such as those used by law enforcement
and intelligence agencies.
Dark Web:
❖ The dark web is a subset of the deep web that is only
accessible through special software, such as the TOR (the
onion router) browser. It is hidden from conventional search
engines and requires users to take specific steps to remain
anonymous.
❖ The dark web is often used for illegal activities, but it is also
used by legitimate users for a variety of purposes.
❖ For example, journalists may use the dark web to
communicate with whistleblowers without being tracked.
Activists may use the dark web to organize protests against
authoritarian governments. And people in countries with internet censorship may use the dark web to access
websites that are blocked by their government.
Issues with the DarkNet:
❖ Used for illegal activities: The Dark Net is often used for illegal activities because it is anonymous and
difficult to track. This includes selling confidential data, such as credit card numbers and Social Security
numbers; selling illegal drugs and weapons; and hiring hackers and other criminals.
❖ Anonymity of users makes it difficult to identify the culprits: The Dark Net's anonymity makes it
difficult for law enforcement to identify criminals and prosecute them. This is because users can hide their
identities and locations, making it difficult to track them down.
❖ Uses cryptocurrencies for payment, makes tracking transactions difficult: Many Dark Net transactions
are conducted using cryptocurrencies, such as Bitcoin. Cryptocurrencies are digital currencies that are not
regulated by any government or financial institution. This makes it difficult for law enforcement to track
cryptocurrency transactions and identify criminals.
❖ Global distribution of users makes it difficult to crack the network: The Dark Net is used by people all
over the world. This makes it difficult for law enforcement to crack down on DarkNet crimes, as they have
to coordinate with law enforcement agencies in other countries.
Steps Taken To Counter Dark Net Crimes:
The Indian government has taken some steps to counter Dark Net crimes. These include:
❖ Directing immunity for ethical hackers who help police counter DarkNet crimes: The Indian
government has directed that ethical hackers who help police counter DarkNet crimes will be granted
immunity from prosecution. This is to encourage ethical hackers to help law enforcement track down and
prosecute Dark Net criminals.
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❖ CDAC (Centre for Development of Advanced Computing) working with CSIR to effectively monitor
dark web activities: The Centre for Development of Advanced Computing (CDAC) is working with the
Council of Scientific and Industrial Research (CSIR) to develop new technologies to monitor DarkNet
activities. This technology will be used by law enforcement to track down and prosecute Dark Net criminals.
❖ Kerala has established a darknet lab in its Cyberdome project: The state of Kerala has established a
darknet lab in its Cyberdome project. This lab will be used to research and develop new ways to combat
Dark Net crimes.

Q. Which of the following statements explains the dark web?

(a) It is the part of the internet that is accessible to everyone.
(b) It is the part of the internet that can only be handled by 'dark web license' holders.
(c) It is a subset of the deep web that is only accessible through special software.
(d) None of the above

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