Hashing is not the same as encrypting.
I can hash has the entire bible into a single 256 character hash. I can use that hash to prove that the copy of the bible you have is the same as mine, but I can't use that hash to reconstruct the data.
Encrypting the text is done for privacy, normally for transmission across networks or if stored privately.
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I should have explained compression while I was at it.
Compression is the technique of replacing commonly repeating patterns with indicator codes, so, in a non real example, you could replace the word "the", with the number "1", as the word "the" appears often, reducing 3 characters to 1, saves space. In reality, the patterns are often dynamically calculated and stored as a table.
There are two types of compression lossy and non lossy. In non lossy, you have to maintain the original content verbatim.
In lossy environments, such as photography, you can replace an area of approximately the same colour red, with a pattern, or mask, that describes the approximate colour and area of similar colour. So a lot of pixels get replaced by a simple vector area description and colour palette number.