The present invention is a system and method for lossless compression of data. The invention consists of a neural network data compression comprised of N levels of neural network using a weighted average of N pattern-level predictors. This new concept uses context mixing algorithms combined with network learning algorithm models. The invention replaces the PPM predictor, which matches the context of the last few characters to previous occurrences in the input, with an N-layer neural network trained by back propagation to assign pattern probabilities when given the context as input. The N-layer network described below, learns and predicts in a single pass, and compresses a similar quantity of patterns according to their adaptive context models generated in real-time. The context flexibility of the present invention ensures that the described system and method is suited for compressing any type of data, including inputs of combinations of different data types.
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