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Werner Buchholz is a computer scientist who is best known for coining the term byte while working on the IBM 7030 (Stretch) in 1956. Buchholz used the word “byte” to describe a group of bits used to encode one character, such as a single letter of a word string. The byte proposed by Buchholz was eight bits long.
Buchholz created the term byte by spelling it with a “y” to avoid the possibility of it being confused with the similarly spelled "bit". The eight-bit standard for byte was put forward because 256 characters could be displayed using the eight bits, making it sufficient for most applications. Although Buchholz’s byte contained eight bits, a byte is conceptually the smallest grouping of data that a computer is processing (biting). For some functions, a four-bit byte is all that is needed – though some call these "nibbles", reserving the term "byte" for eight-bit bytes.