Why do countries have two letter abbreviations?

Why do countries have two letter abbreviations?
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In which system were countries assigned 3-letter abbreviations and which system is now using 2? Is this a Postal code you’re referring to, or something else? I am mostly familiar with the oval bumper-stickers in Europe that have 1, 2 or 3 letters (e.g. D for Deutschland, DE for Denmark; F for France; FIN for Finland; etc.) http://en.wikipedia.org/wiki/List_of_international_license_plate_codes
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