Let's start with some background information on prefixes, by mentioning the Metric system:
kilo (k)* = 10 ^ 3 = 1,000 thousand
mega (M) = 10 ^ 6 = 1,000,000 million
giga (G) = 10 ^ 9 = 1,000,000,000 billion
tera (T) = 10 ^ 12 = 1,000,000,000,000 trillion
* Note that according to the Metric system, the "k" or "kilo" prefix is always lowercase. The binary forms of kilobytes and megabytes have become standard throughout the computer industry, although they are incorrect uses of the SI prefixes (in the IT field lowercase "k" is used to describe decimal kilobits, and capital "K" is used for binary kilobytes).
When used to describe Data Transfer Rate, bits/bytes are calculated as in the metric system
In data communications, a kilobit is a thousand bits, or 1,000 bits. It's commonly used for measuring the amount of data that is transferred in a second between two telecommunication points. Kilobits per second is usually shortened to kbps or Kbps**. Some sources define a kilobit to mean 1,024 bits. Although the bit is a unit of the binary number system, bits in data communications are discrete signal pulses and have historically been counted using the decimal number system. For example, 28.8 kilobits per second (kbps) is 28,800 bits per second.
1 bit (b) = 0 or 1 = one binary digit
1 kilobit ( kb) = 10^3 bits = 1,000 bits
1 Megabit (Mb) = 10^6 bits = 1,000,000 bits
1 Gigabit (Gb) = 10^9 bits = 1,000,000,000 bits
** Note: Although technically speaking, the term kilobit should have a lowercase initial letter, most published reports capitalize it in abbreviation, resulting in "56 Kbps," or even the really confusing "56K." That leaves you with the sometimes omitted lowercase "b" to distinguish between bits (b) and bytes (B). When used as a measurement of network data transfers, or throughput, always assume the word is bits first.
When used to describe Memory Size, or Data Storage bits/bytes are generally calculated as some exponent of 2
In Data storage, and when describing Memory size, a Kilobyte is 2^10, or 1024 bytes. Because of binary computer architecture and memory address boundaries, bytes are always some multiple or exponent of two.
Although data storage capacity, such as on hard drives is generally expressed in binary Megabytes (2^20), most Hard disk manufacturers, and some newer BIOSes use decimal megabytes (10^6), which is slightly different and it gets confusing...
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