For some important aspects of Internet engineering, most notably IP Addressing , an understanding of binary arithmetic is critical.
All digital computers represent data as a collection of bits .
A bit is the smallest possible unit of information. The meaning of the bit, which can represent almost anything, is unimportant at this point. The answer is four. Likewise, three bits have eight states. For example, if a computer display had eight colors available, and you wished to select one of these to draw a diagram in, three bits would be sufficient to represent this information.