Digital files are compressed using a process including Schmidt decompositions of matrices using an algorithm, termed 'BSD' herein, which is based on an algebraic method generalizing QR decomposition. Software analyzes an input file and initially identifies a matrix M, with entries within a predefined set of integers, within the file. Next, essential entries are defined, extracted from M, that contain sufficient information to recover Musing BSD. The compressed file includes the essential entries and their positions within M. To achieve an encryption process, software encrypts the pattern matrix that includes the positions of the essential entries of M. To achieve a lossy compression, software identifies essential entries that contain sufficient information to recover an approximation to M for which the quality is determined by an error threshold. For a more efficient lossy compression, software uses singular value decomposition, BSD, and other signal processing of M.