We use a standard procedure for predictive coding. With the help of a copy of , an unknown file can be compressed as follows: Again, default characters are inserted at the beginning. For each character , the predictor emits its output based on the previous characters. There will be a such that . The estimate of is given by . The code of , , is generated by feeding into the Huffman Coding algorithm (see below), or, alternatively, into the Arithmetic Coding algorithm (see below). is written into the compressed file. The basic ideas of both coding algorithms are described next.

Juergen Schmidhuber 2003-02-25