Bioinformatician here. Yes, people have come up with many encoding systems: 2-bit encoding systems, 3-bit encoding systems (for N's), various encoding schemes t

Bioinformatician here. Yes, people have come up with many encoding systems: 2-bit encoding systems, 3-bit encoding systems (for N's), various encoding schemes that allows long runs of N's to be stored with little memory costs, and even reduced amino acid alphabets for e.g. 4-bit amino acid sequences. In my experience, the performance bottlenecks in bioinformatics is usually IO, parsing, de/compression and needlessly slow algorithms. You rarely get meaningful speed improvements by internally encoding the sequences one way or another (storing small fixed-size sequences in machine integers is an exception). There can be other advantages, though, like reduced memory consumption. Partly for that reason, most DNA data is just stored as gzipped text files.