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Computers use binary code, made up of 1s and 0s, to store data because it is a reliable way to communicate information. This system allows devices to interpret and process various types of data, such as movies, music, and directions, by using transistors that switch between high and low voltage levels. The binary sequences themselves do not have a predetermined meaning but can be encoded to represent different types of data, which the computer's processor can interpret and execute based on software instructions.