What is Codec?

The definition of Codec (Compression- Decompression) is hardware or a software algorithm that encodes audio/video data into a file format that can be transmitted and received, stored, encrypted or played back efficiently.

There a many Codec formats some for different uses. As technology improves new codec are created. For example, raw uncompressed PCM audio (44.1 kHz, 16 bit stereo, as represented on an audio CD or in a .wav or .aiff file) has long been a standard across multiple platforms, but its transmission over networks is slow and expensive compared with more modern compressed formats, such as MP3.
There are advantages and disadvantages with transmitting data with a codec. For example:

Lossy codecs: Often used in transmission of video and audio data are the most popular codecs in the software world are lossy, meaning that they reduce quality of the video or audio or both but in most cases is not noticeable to the user. Because the data is compressed there are improvements in smaller file sizes and decreased bandwidth during transmission.

Examples are: 
Audio: Dolby AC3, AAC, MP3, WMA
Video: H.264 / MPEG-4 AVC, H.263, H.261, Open AVS, WMV 

Lossless codecs: Often used in storage of video and audio data are typically used for archiving data in a compressed form while retaining all of the information present in the original stream. This allows future editing of the data at a higher resolution.

Examples are:
Audio: MPEG4-ALS, FFMPEG, QuickTime
Video: FFV1, JPEG 2000, H.264 Lossless, PNG


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