Binary is a system that uses only two digits, 1 and 0, to represent all data in computers. It represents on and off signals that computers can understand. A binary number represents its value by powers of two, with the first digit having a value of 1, the second 21=2, the third 22=4, and so on. To convert a binary number to decimal, you add up the place values of the 1s in the binary number. Letters are also represented in binary by assigning numeric values to different parts of an 8-digit binary number.