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In this video, we will explore how the PNG image file format cleverly compresses images while preserving quality. The most commonly used image file formats are PNG and JPEG, with JPEG often causing image artifacts during compression, especially for images with vector graphics or text. PNG, on the other hand, avoids this issue due to its lossless compression technique, which builds upon text compression algorithms like those in zip files. While PNG's method is smart, it can be complex and slow when applied to images.