LZMA
lossless data compression algorithm

LZMA (Lempel–Ziv–Markov chain algorithm) is a lossless data compression algorithm developed since 1998 by Igor Pavlov, the developer of 7-Zip. It has been used in the 7z format of the 7-Zip archiver since 2001. This algorithm uses a dictionary compression scheme somewhat similar to the LZ77 algorithm published by Abraham Lempel and Jacob Ziv in 1977 and features a high compression ratio (generally higher than bzip2) and a variable compression-dictionary size (up to 4 GB), while still maintaining decompression speed similar to other commonly used compression algorithms.
LZMA2 is a simple container format that allows multi-threaded compression and decompression using multiple separate LZMA streams. It is used in both in the 7z and the xz format.
Overview
LZMA uses a dictionary compression algorithm (a variant of LZ77 with huge dictionary sizes and special support for repeatedly used match distances), whose output is then encoded with a range encoder, using a complex model to make a probability prediction of each bit. The dictionary compressor finds matches using sophisticated dictionary data structures, and produces a stream of literal symbols and phrase references, which is encoded one bit at a time by the range encoder: many encodings are possible, and a dynamic programming algorithm is used to select an optimal one under certain approximations.
Prior to LZMA, most encoder models were purely byte-based (i.e. they coded each bit using only a cascade of contexts to represent the dependencies on previous bits from the same byte). The main innovation of LZMA is that instead of a generic byte-based model, LZMA's model uses contexts specific to the bitfields in each representation of a literal or phrase: this is nearly as simple as a generic byte-based model, but gives much better compression because it avoids mixing unrelated bits together in the same context.
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