Educational 
January 30, 2025 
10 min. 
DeepSeek, the latest AI breakthrough from China, has captured global attention—not just as a formidable competitor to well-known models like ChatGPT, but also for its dramatic impact on the stock market.
Led by a team of Chinese researchers and engineers, DeepSeek stands out for offering an efficient, open-source AI model that directly rivals OpenAI’s proprietary solutions. Its key advantage? Cost-effectiveness. DeepSeek delivers high-quality results while reducing operational costs by up to 90%. But what makes this AI so special? How does it work, and what impact is it having on the AI industry?
What is DeepSeek?
DeepSeek is an advanced AI model developed by a Chinese company with a focus on efficiency, accessibility, and specialized applications. Founded in May 2023 by Liang Wenfeng, with backing from the hedge fund High-Flyer, the company’s mission is to democratize AI, making it accessible to businesses and developers worldwide.
Unlike general-purpose models like ChatGPT, DeepSeek prioritizes accuracy in niche sectors such as healthcare, finance, and law. Its key differentiator lies in its ability to provide in-depth insights within these fields, leveraging complex data analysis for more precise and reliable responses.
In its latest research, the Chinese AI team has demonstrated significant advancements in reasoning capabilities, solidifying its position as one of the most efficient AI models today.
How Does DeepSeek Work?
DeepSeek is built on a Transformer architecture similar to ChatGPT-4 but with optimizations that enhance both efficiency and accuracy. Its main technical innovations include:
1. Selective Attention Mechanisms
DeepSeek employs a Sparse Attention system that focuses only on the most relevant information within a text. This reduces computational demands without compromising response quality.
2. Hybrid Training Approach
Unlike traditional models trained solely on generic datasets, the Chinese AI incorporates specialized data, such as medical articles, legal documents, and financial reports. This enhances its precision in specific industries, making it ideal for professional use.
3. Custom Fine-Tuning
Businesses can train DeepSeek using their own proprietary data, ensuring a highly specialized model tailored to their needs while maintaining data security.
4. Computational Efficiency
Thanks to its Mixture-of-Experts (MoE) architecture, the Chinese AI activates only the necessary processing units for each task. This enables it to run on more affordable GPUs, lowering costs and increasing accessibility.
Understanding DeepSeek’s Thought Process
One of DeepSeek’s standout features is its ability to explain the reasoning behind its responses. Every time a user submits a prompt, the platform reveals the steps it takes to generate an answer.
Only after outlining this “thinking before responding” process does the Chinese AI deliver its final response.
At first glance, this might seem trivial or unnecessary. However, understanding how the AI processes a command, reviews its training data, and formulates a response can be invaluable for developers and everyday AI users alike.
Another major advantage of this transparency is that it helps demystify large language models (LLMs) like DeepSeek, ChatGPT, and Gemini. These models are not true artificial intelligences—they recognize patterns and generate text, but they do not possess genuine reasoning abilities.
For example, when asked whether it can solve complex mathematical equations, the Chinese AI initially responds affirmatively, similar to ChatGPT. However, by analyzing its reasoning process, users can see that DeepSeek does not actually perform mathematical calculations—it simply recognizes equations and patterns.
While it may produce correct answers, errors can still occur.
DeepSeek’s Key Models
The Chinese AI platform offers different versions, each optimized for specific tasks:
- V3: A general-purpose model capable of generating text, code, and summaries, focusing on efficiency and low cost.
- R1: Specialized in complex reasoning, outperforming OpenAI’s o1 model in logic and problem-solving tests.
- R2: Designed for financial applications, assisting with audits, reports, and risk analysis.
- Legal: Trained to understand legal texts, aiding lawyers and firms in contract reviews and case law analysis.
How Does DeepSeek Compare to OpenAI?
While OpenAI remains the dominant force in the global AI market, DeepSeek is making waves for three key reasons:
- Cost: OpenAI charges high fees for premium access, whereas the Chinese AI promises comparable quality at just 10% of the cost.
- Specialization: While GPT-4 and o1 are general-purpose models, DeepSeek focuses on specific industries, ensuring higher accuracy.
- Accessibility: DeepSeek is open-source, allowing more developers to use and improve its models.
However, DeepSeek does have a notable limitation—it cannot browse the internet in real-time like GPT-4. Its knowledge base is restricted to data available up until mid-2023.
Why is DeepSeek Important?
DeepSeek represents a paradigm shift in AI accessibility and affordability. Its impact can be seen in several key areas:
- Democratizing AI: Small and medium-sized businesses can now leverage high-performance AI without exorbitant costs.
- Higher Accuracy in Critical Sectors: Professionals in healthcare, law, and finance can benefit from a model tailored to their needs.
- Innovation and Competition: The Chinese AIpressures industry giants like OpenAI and Google to improve their offerings.
Is DeepSeek Worth Using?
Despite its current limitations, the Chinese AI has already disrupted the AI landscape, forcing competitors to take notice. It stands as a viable challenger to industry leaders like ChatGPT while offering a significantly lower cost.
The inability to perform real-time internet searches is a drawback, but it’s likely a temporary one. With continued advancements, DeepSeek could revolutionize the AI market and redefine accessibility for businesses worldwide.
