Lossless and lossy
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Lossless is a way of compressing data which is fully reversible -- e.g., does not throw away data. A losslessly compressed file can be used to create an exact copy of the source file.
Lossy is the opposite of lossless. A certain amount of data is discarded; how much is usually dependent upon a quality or bitrate setting of the codec. This makes the file (or stream) much smaller that lossless compression, but reduces the quality. It is impossible to transcode from one lossy format to another without further degrading quality.
