Compression is the technique to minimize the size of data (or file) by applying some encoding algorithm. The output of the compression is called compressed or zipped data (or file). Decompression is the reverse of compression to get the source data (or file) back by applying some decoding algorithm. The output of decompression is called decompressed or unzipped data (or file).

We used to share data from one computer to another (over LAN, WAN, etc), one device to another. In most cases data being transferred contains redundancy. The compression and decompression algorithms use these redundancy attributes (e.g. number of occurrences, locations of occurrence, etc.). In one way we can say - more redundancy in data (or file) would result more compressed (i.e. less size) data (or file).  In compressed data communication, sender and receiver must have mutual understanding of encoding and decoding schemes or they must have based on same standard.

The purpose of compression technique is to optimize the disk space while storing data in computer and to use less bandwidth while data is to be transferred over network. There are security benefits as well.

In general we use different data formats like text, image, audio and video during our day to day communication and data transfer. One particular encoding scheme may not be effective for every data format. For example, it is not necessary that the encoding scheme, which works well upon text data, would also give good results with image format data.