It's a virus that merely watches .jpg and executes code that it finds in there. Now this .jpg code can do anything rather than one specific thing like most viruses did in the past. Someone can send out .jpg code that deletes files, and someone else can send out .jpg code that sends reg info somewhere..
This kind of virus is nothing new. For example, there are tons of virii(sp?) out there that allow other people unlimited access to the infected computer. The only "new" thing about this JPEG virus would be that the instructions on what to do are transmitted using JPEG files instead of, say, a TCP connection.
Actually, I'd classify this as a low-threat virus, since the chances that someone has both an infected system and then views a JPEG with embedded instructions are pretty small. Certainly much lower than a virus that doesn't have to be "activated" by a JPEG file.
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