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Firstly, this paper introduces some related concepts, principles, technology, and image pre-processing knowledge about digital watermarking. Secondly, on the basis of JPEG image compression coding and the HVS, the paper analyzes and compares some current image watermarking algorithms based on block DCT, and presents a novel dual-color image watermarking algorithm based on spread-spectrum technology and block DCT. Lastly, VC++ and Matlab7.0 are used to implement the proposed image watermarking algorithm. Simulation results show that the proposed algorithm in this paper has good performances in transparency and robustness.