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What is Artificial Intelligence (AI) and How It Works?

Prakash Matre
Prakash Matre at September 27, 2023


Artificial intelligence refers to the stimulation of human or natural intelligence in machines that can learn, mimic and perform human-like tasks. Such technologies have a significant impact on the quality of our lives. Artificial intelligence is an entity created by humans capable of thinking, acting and performing tasks intelligently with no or fewer instructions. Smart assistants, social media monitoring, self-driving cars, Alexa, Siri and chatbots are some of the stellar examples of AI. AI in finance, or finance AI, is significantly impacting banking and fintech companies by providing additional value over traditional systems. It is rapidly revolutionising financial services globally. AI companies are developing cloud-based systems ensuring that businesses are moving towards advanced and technology-driven directions. Today, AI trading sites are gaining popularity as these platforms place trades on behalf of human beings, which is perfect if you have little experience in the investments arena. Sounds interesting? Artificial intelligence examples that will blow your mind are machines that can detect life-threatening diseases at earlier stages. The future of AI will leave you awestruck as attempts and complex research are being made to develop masterpieces that can surpass human intelligence.

Purpose Of Artificial Intelligence

The sole purpose of AI is to support humans and aid them in making advanced decisions. Artificial intelligence helps us live meaningful lives by limiting repetitive and labour-intensive tasks. Not only that, it facilitates companies, organisations and firms in conserving a significant amount of time and money. AI has the potential to automate heavy tasks and improve process efficiencies. Further, AI aims to change our lives by removing inequality, striving and human suffering.

History of AI 

Artificial Intelligence (AI) originated in the 1950s as a field of computer science aiming to create machines capable of human-like reasoning. Early work, such as Alan Turing's Turing Test, laid theoretical foundations. The 1960s saw the creation of programs capable of solving mathematical problems and playing games. However, progress slowed due to limited computing power. The 21st century brought advancements in machine learning, enabling AI systems to improve performance through data analysis. Breakthroughs like deep learning revitalized the field, leading to practical applications in speech recognition, image processing, and more. Today, AI permeates daily life, driving innovation across industries.

Examples of AI Usage 

  1. Healthcare: AI assists in diagnosing diseases through medical imaging, such as detecting abnormalities in X-rays and MRIs.
  2. Finance: AI algorithms analyze market trends to make stock trading predictions and manage investment portfolios.
  3. Retail: Chatbots and virtual assistants enhance customer service, while recommendation algorithms personalize shopping experiences.
  4. Manufacturing: AI-driven robots and automation systems optimize production processes and quality control.
  5. Transportation: Self-driving cars employ AI for navigation and collision avoidance, potentially revolutionizing the automotive industry.
  6. Agriculture: Drones equipped with AI technology monitor crop health, manage irrigation, and predict yield outcomes.
  7. Energy: AI manages and optimizes the distribution of electricity in smart grids, leading to better energy utilization.
  8. Entertainment: Streaming services use AI to suggest content based on user preferences, enhancing user experience.
  9. Education: AI-powered learning platforms offer personalized educational content and adapt to individual student needs.
  10. Security: Facial recognition and behaviour analysis AI systems aid in enhancing security and surveillance measures.

These examples demonstrate the diverse applications of AI, showcasing its potential to transform various aspects of modern life and industry.

Types Of Artificial Intelligence

Based on two categories, AI can be divided into various types. The type-1 category is based on capabilities, while the type-2 category is based on the functionality of AI.


Based on capability, AI can be divided into narrow AI, general AI and strong AI.

  • Narrow Or Weak AI

Narrow AI is that type of AI that performs a dedicated task with intelligence, and it cannot act beyond its limitations as it is only trained for one specific task. Self-driving cars and speech recognition are a few perfect examples of narrow AI.

  • General AI

It is a type of artificial intelligence that is still under research. It takes a significant amount of energy, time, and effort to build a system that can perform any task with the same perfection as humans.

  • Super AI

Super AI refers to systems or technologies that could surpass human intelligence and perform even better than them. Super ai is expected to perform activities like solving puzzles, making judgements, thinking and communicating. However, this is still a world-changing task and a hypothetical concept.


Based on functionality, AI can be subdivided into four types. Want to know about them? Keep on reading..

  • Limited Memory

These machines can store data and use it for a limited period only. Self-driving cars are a perfect example of the same.

  • Theory Of Mind

This type of AI should understand human emotions, beliefs, and people and interact socially just like humans. But,  these machines are still not developed yet.

  • Reactive Machines

While focusing only on current scenarios, such AI systems do not store past experiences or data and react accordingly.

  • Self-Awareness

These technologies will have their sentiments, consciousness and awareness. Self-awareness machines do not exist in reality. In future, if developed, these machines will perform smarter than human minds.


How Does AI Work?

Artificial Intelligence systems focus on three primary skills that are learning, reasoning and self-correction. A foundation of specialised hardware and software is needed to train machine learning algorithms. AI systems investigate massive amounts of data, analyse the data to make correlations and patterns, and make future predictions on the basis of these correlations and patterns. The computer uses historical data in order to respond to particular actions.

What Are The Advantages Of AI?

There isn't even a doubt in the fact that AI has made our lives smooth and easy. From map directions, music recommendations to fraud detection and prevention, artificial intelligence is leading all the industries all over the globe. There’s no other option than accepting advancements and incorporating them into our lives. With the indefinite advantages of AI, let us discuss a few of them today.


AI believes in the concept of “logic above all”. Unlike humans who have emotional sentiments, AI does not have emotional feelings that make technology think logically. Due to the absence of emotions, AI’s efficiency does not get hampered.


This is the main reason why artificial intelligence is leading the world. Based on the previous information these technologies collect over time, AI performs its functions with minor errors. Reduction in mistakes leads to a spike in accuracy levels.


On average, a human can toil for 7-8 hours a day, including the breaks, and humans need regular intervals of time to refresh themselves and regain their energy. Moreover, humans get bored by performing repetitive tasks. Unlike humans, artificial intelligence-powered systems can work 24 hours a day and 365 days a year without breaks or feeling bored.


By taking care of your repetitive tasks and reducing stress on your employees, who can focus on high-impact tasks, AI strengthens the efficiency of your business. Further, your employees can focus on complex tasks that require human intervention.


AI systems help in solving customer grievances by addressing their queries efficiently. Chatbots generate highly personalised messages that support customers in finding the best solutions for their doubts. Where can I find AI in daily life?

  • AI in finance: AI is being used in the finance sector in several ways, including detecting frauds, automated tasks, predicting loan risks, online chatbots and various others.
  • AI on social media: AI is used in various social media platforms such as Twitter, Instagram and Facebook to remove inappropriate content, comments and posts.
  • AI in the gaming sector: The gaming sector is highly influenced by artificial intelligence.
  • AI in healthcare: sophisticated machines are the most outstanding example of AI in the health sector. However, research is being done to develop machines that can detect life-threatening diseases such as cancer during early stages.
  • AI in navigation: These days, Uber drivers use AI technology to analyse routes and search for road traffic.
  • AI in e-commerce: Recommendations based on your previous preferences and interest history while shopping are a perfect example of AI being used in the e-commerce industry.

Drawbacks Of Artificial Intelligence

All that glitters is not gold. Mesmerising benefits of AI fail to surpass the undeniable laggings that come along with it. Even after years of research and developments, AI cannot think outside the box. A lack of human touch is a significant shortcoming of AI. Artificial intelligence tools can hamper our mind’s growth due to over dependency. Further, a massive amount of costs and resources are involved in meeting the latest requirements. And how one can overlook its effect on unemployment?


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