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Computers can use combinations of bits to represent anything; the number of bits depends on the number of messages that need to be distinguished. Imagine, for example, a computer that works with the letters of the alphabet. Five-bit input signals can represent thirty-two different possibilities (25 = 32). Functions within the computer that work on letters sometimes use such a code, although they more often use an encoding with seven or eight bits, to allow representation of capitals, punctuation marks, numerals, and so on. Most modern computers use the standard representation of alphabet letters called ASCII (an acronym for American Standard Code for Information Interchange). In ASCII, the sequence 1000001 represents the capital letter A, and 1000010 represents the capital B, and so on. The convention, of course, is arbitrary.
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William Daniel Hillis (The Pattern on the Stone: The Simple Ideas that Make Computers Work)