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Gzip is a popular lossless file compression tool that reduces the size of data by identifying and replacing repeated sequences with metadata or shorter sequences. This process, initiated by algorithms like lz77, aims to minimize the total amount of bits needed to represent information without losing any data. Unlike lossy compression methods such as jpeg, gzip ensures no information loss while reducing file size. Developed in 1992 by Jean-Luc Gailly and Mark Adler, gzip was created as an alternative to existing compression technologies due to patent restrictions held by large tech corporations.