Three dimensional or holographic data storage uses the entire storage medium rather than just layers, achieving much higher storage capacity. It works by using two laser beams and a special light modulator to encode data as a hologram that can be later reconstructed. Advantages include storing thousands of DVDs worth of data in a single disk, transfer rates over 1Gbps, longevity of 50+ years, and applications like storing the entire Library of Congress collection in just a few disks. However, low cost materials and components were still needed for commercial viability.