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JPEG stands for Joint Photographic Experts Group.

A JPEG is a well-known file format used for photographs and other images. Digital cameras, for example, often use the JPEG format for storing pictures and transferring them onto computers. The JPEG is known for high compression ratios, and most websites that allow image uploads accept the standard JPEG file.

The JPEG format was specifically designed to compress image files in a way that information lost is information that is not easily detectable by the human eye.  For example, the human eye can detect differences in intensity (brightness) much better than differences in tone (color); so JPEG compression discards more color information than intensity information.  The idea is that JPEG files require less disc storage space, but that the pictures are not noticeably compromised.  On the other hand, while JPEG works well for typical photos (continuous tone), it is less effective for line drawings or images that contain text: the sharp edges may appear blurred.  For this reason, lossless file formats are recommended for images with sharp lines or boundaries

The Joint Photographic Experts Group was founded in 1986. 

JPEG compression works by allowing pixels of similar color values to be stored as a single color block, substantially reducing storage sizes . Variable JPEG compression allows the degree of compression to be selected, so the operator can choose the point at which the compression begins affecting the image view. JPEG files delivers 24-bit color imaging. Each pixel in a digital image contains 24 bits of data used to define the exact color, allowing for 16 million potential color variations. 

JPEG Image Example