Coordinate Reference Systems (CRS)
A Coordinate Reference System (CRS), sometimes called Spatial Reference System, is a system consisting of specific choices of horizontal and/or vertical datums to determine the precise location of an entity. CRS is used to assign an absolute position to an object so that it can be accurately and consistently located.
Horizontal Datums can either be geocentric (earth-centered 3D cartesian system), geographic (latitude, longitude), or projected (X, Y). The last 2 types are most commonly used for mapping locations used in engineering or surveying. While a geographic system uses a spherical or ellipsoidal model to locate a position on Earth, the projected system models the world using a plane surface.
An example of a geographic system is WGS84; on the other hand, the Universal Transverse Mercator (UTM) is a projected system.
No model or projection is perfect; each has its own advantages and disadvantages. In the end, the choice of datum depends on the purpose of the project.
Vertical Datums are surfaces that serve as references for measuring the elevations of points. They can either be based on an arbitrary system, an established mathematical model of the Earth, or a Geoid.
Similar to horizontal datums, no vertical reference frame is perfect. The model that best fits a project depends on the users.
How do they affect my data?
As previously mentioned, coordinate reference systems are used for accurate and consistent locations of positions. If a wrong CRS is used in a project or a CRS assigned to a file does not match the system used by the project it was inserted to, there will be geolocation inconsistency that may go beyond the tolerable amount of error.
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