What is a Transparent Gif? That's easy. If you view my web page under the "Contents" you'll see the buttons, and you'll notice that you can see the background image along the outsides of the uneven gif. Transparent gifs allow you to do this. Still confused? I hope so, 'cause here is the real example:

Look at the difference between the 2 images below.

The first image has the same color and design background as the background itself. (In this case, just plain white) The second image is square and is opaque to the background behind it. Just as the round buttons on my web page are transparent on the edges, appearing in a circle form rather than a square.

How to do it

First off, you'll need 2 shareware application Graphic Converter, and the freeware application Transparency. Both can be found at my web site on the software page. 

Take the image and paste it into Graphic Converter. Use your bucket tool to pour a color that isn't in the image itself. Like Hot Pink. (I choose white, because my image has no white in it) 
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Next, you may notice that there are small dots all around the image. This is because those small pixels may not have been all a perfect color, so the bucket tool ignored the slightly off color that they are. Just magnify your screen are 400 times, and use your eraser to delete the last of the dots. Then copy the image, and paste it into the shareware program Gif Converter. Do a "Save As" name it whatever you want with the .gif as the ending of the name. Now quit all those applications, and open up Transparency. When inside the application go under the "File" menu and say "Open". Then open your gif you just saved from Gif Converter.

Ok, this is the important part. Move your mouse up and click and hold the background of your image. (Mine is the white background) You'll see a table with lots of colors come up. Don't move your mouse. Keep it in the same place and release your mouse button. Your background color should turn a grey color. If it didn't do this paragraph over again. If it did, save your gif replacing the old one.
Now upload your gif using your ftp (file transfer protocol) application to your server. 

Congratulations! Your gif is now transparent!