Data compression, sometimes known as compaction, is the system under which a piece of information which is scheduled to be either stored or transmitted as the amount of data within it reduced. This is normally accomplished by a coding routine. There is nothing terribly new about the idea of compressing data, in fact where Morse code was first invented decades ago the most commonly used characters were given the shortest codes so as to reduce the overall size of an average transmission. On the telephone, it is common for higher or lower frequencies which are barely audible to the human ear to be left off, thus also reducing transmission loading.

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While text files typically take up a relatively small amount of disk space, graphic files can be quite immense and so cutting down the size of a graphic to, often, a small fraction of the original size is a very worthwhile project.

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There are two main types of compression; lossy, in which some data is discarded and cannot be recovered; and lossless, in which all existing data is retained in an altered format, and which can be turned back into the original complete data without degradation. Where text is concerned it is absolutely vital to retain 100% of data and so lossless systems are used for text compression; where graphics are concerned it is sometimes not a great sacrifice to throw away often large proportions of detail particularly for graphics which are intended for the Internet and which need to have the smallest file size possible so that they can load quickly even over a slow Internet connection, and so lossy systems can be quite acceptable in these circumstances. Voice transmissions, similarly, can be degraded quite considerably while still remaining perfectly clear and audible; and whilst purists may argue against this even music can be subjected to quite considerable lossy compression without being very noticeably degraded.

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