Inside the computer, data is represented in binary form. Binary means two. Binary numbers consists of only two digits. These are '0' and '1'. Each binary digit is represented by an electrical pulse inside the computer. The digit '1' is represented by the presence of electrical pulse. The digit '0' is represented by the absence of a pulse. Each binary digit is called bit (which stands for binary digit). Bit is the smallest element of data. A collection of 8-bits is called byte. Typically, a single character is represented by 8-bits (or one byte) inside the computer.