The basic unit of information in a binary numbering system, it takes 8 bits to make up a byte. For the most part, bits are used to describe transmission speeds, whereas bytes generally refer to storage capacity. It works like this: The electronic circuitry in computers detects the difference between two states (high current and low current) and represents these two states as one of two numbers, 1 or 0. These basic high/low, either/or, yes/no units of information are called bits. The word bit derives from the phrase "binary digit."