GIF (Graphics Interchange Format) is an image format developed by CompuServe and is the most common type of image format used on the Web. It was developed as a way to store images in small files that can be quickly exchanged and easily downloaded. GIF files have a color depth of 8 bits per pixel, so the image must be in Index color mode in order to be saved as a GIF. The word pixel is short for picture element, the smallest unit of a digital picture. 8 bits per pixel makes a total of 256 different colors (see color bit depth). GIF files can be accurately displayed on a greater number of systems, as most systems can display at least 256 colors. GIF files are also saved as low-resolution, usually 72 ppi. The GIF format should never be used for images that will be professionally printed. If you have an image you would like to put on the web and also printed, you will need to save two separate files, one as a GIF and one as a TIFF or EPS. 

GIF compression is known as a "lossless compression" method, in which the image is analyzed and compressed without the loss of the original picture data. The GIF format is best suited for items like logos, banners, buttons, and graphics, because most of these items are designed with the 256 color palette (8-bit color). If the items are saved as a GIF, none of the original color data will be lost. If the GIF format is used for an image that is larger than 8 bit color, such as a photograph, then the colors in the image that are not found in the 8-bit color palette will be dithered. There is no problem with dithering the colors except that it creates a much larger file size because there is more information to store due to the number of extra pixels required to create the dithered color.

The compression technique used with GIF is called LZW compression, which stands for Lempel, Ziv, and Welch. Lempel, Ziv, and Welch are the mathematicians who were the inventors of this technology. The computer maker Unisys holds the patent on LZW file compression technique which means that anyone creating GIF files should owe Unisys a licensing fee for the use of the LZW compression technology. Most software programs like Adobe Photoshop® and Macromedia Fireworks®, that are used to create GIF files, are already licensed by Unisys, so most people should not have to worry about it.

A technique called "run length encoding" is used in GIF compression. The "run length encoding" technique records the color changes of each horizontal line of pixels, from left to right. If a complete row of pixels is of one color, then there is less data to record. When there are fewer color changes per row of pixels, the result will be a smaller GIF file and a faster loading time. If the file size and the loading time are of a major concern, then large amounts of extra vertical detail should be avoided. In the example shown below, a border of stripes was added to each identical GIF image. The image with the vertical stripes on the left, will cause the file size to be larger because there are more color changes to record on each horizontal row of pixels. The horizontal stripes on the image on the right, create a smaller file because there are fewer color changes running horizontally along the image.