"The moment you choose to save as jpg, the algorithms already reduce filesize and discard valuable information" Wrong. Jpeg standard has a special lossless mode. In older software products there remains the possibility of round-off errors unless same program (same algorithm) is used to decode and encode the image. Current jpeg implementations do not lose information at all in lossless mode (0% compression). Reduction in file size (compared to, say, BMP) is inherent to the method used. And in actuality the JPEG Group began developing JPEG2000 after they had introduced the lossless mode in jpeg standard (goes by the name JPEG-LS). More info: http://www.jpeg.org/