It is then 'reconstructed' during decompression. Compression can be implemented in either hardware or software. Software compression is slow compared to hardware compression. As they are hardware based they are difficult to upgrade.
Upgrades are usually a simple matter of installing new versions of the driver.
It is common to have many different software codecs on one computer. It is essential, during playback, to match the codec used to make the particular video sequence. When capturing video, some capture cards allow real-time compression such as Creative Labs' VideoBlaster RT 300. However, in many instances the video is captured 'raw' and compressed later in software. Lossless techniques are mainly used for text-based data where compression rates are quite high due to common letter groupings, etc.