Traditionally, data compression deals with the problem of concisely representing a data source, e.g. a sequence of letters, for the purpose of eventual reproduction (either exact or approximate). In this work we are interested in the case where the goal is to answer similarity queries about the compressed sequence, i.e. to identify whether or not the original sequence is similar to a given query sequence. We study the fundamental tradeoff between the compression rate and the reliability of the queries performed on compressed data. For i.i.d. sequences, we characterize the minimal compression rate that allows query answers, that are reliable in the sense of having a vanishing false-positive probability, when false negatives are not allowed. The result is partially based on a previous work by Ahlswede et al., and the inherently typical subset lemma plays a key role in the converse proof. We then characterize the compression rate achievable by schemes that use lossy source codes as a building block, and show that such schemes are, in general, suboptimal. Finally, we tackle the problem of evaluating the minimal compression rate, by converting the problem to a sequence of convex programs that can be solved efficiently.