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Compression is used in daily computer use, such as loading files from CDs, downloading files from the internet, or streaming content on platforms like YouTube and Spotify. There are two types of compression: lossless and lossy. Lossless compression maintains all original information but arranges it more efficiently, needing a decompression algorithm on the receiving end. It saves bandwidth, data storage, and transfer times by providing essentially the same content in a smaller file size.