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From Odwiki

gzip compression is a patent free algorithm for providing lossless compression of data.

gzip is distributed with all flavours of Linux and is supported in Windows with applications like WinZip and WinRAR.

The .gz extension was added as a convenience to $HIH/GEOio to allow geometry to be compressed and decompressed on the fly if you save your geometry out with the extension .gz (or .bgeo.gz).