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To reduce the physical size of a file you can use compression technology, which comes in two types, Lossy and lossless.

Lossless compression technology (The type used for storing data and executables) is limited to around a 2:1 ratio at maximum compression dependent on input data.

Lossy compression technologies such as Jpeg for images or MP3 Psychoacoustic compression can exceed this many times over but looses data integrity.

Newer graphics compression technologies such as fractal compression can have startling compression ratios of 100's:1 compression ratios.

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