Why do scientists think the fossil record is incomplete?

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The incompleteness of the fossil record is a result of the unusual conditions necessary to make a fossil. Normally when an animal or plant dies, decay eliminates the remains entirely. Soft materials decay by bacterial and fungal action while harder materials like bone and enamel may require additional action of weathering, but by and large most organisms decay completely.

Once in awhile, though, a dead animal or plant is prevented from decomposing by some aspect in the environment. For instance, if a tree falls in a peat bog, the low oxygen concentration of the bog will prevent the microbial action that would lead to decay. This first stage of fossilization, protection from the environment and biota that might degrade the body, is reasonably rare just on its own. Most animals are killed and eaten by other animals, not sealed under a protective layer of thick mud when they die. Simple protection is enough to preserve a trace fossil (footprints, etc) for millions of years if mud hardens into sedimentary rock. Body fossils (bones) generally only survive tens or hundreds of thousands of years if all they have is this level of protection.  

For long-term preservation of body fossils, mineralization is necessary, and there are several kinds. Most require the fossil to be exposed to ground water with a high concentration of minerals. The minerals precipitate out in the empty spaces of the bones, and as the bones degrade, the minerals fill the voids and form hard crystals. This is rare on its own, and only a fraction of the protected body fossils will mineralize.

Finally the third chance event that must take place is that the fossil must be found and recognized. Most of the bones that have ever fossilized have been broken into chips by time and natural erosion. For those that have not been ground to powder, it almost always takes an expert to recognize them in the field.

That is why the fossil record has gaps. While every ancient animal or homonid must have died, only a small fraction were protected from decay, a smaller fraction yet had their bones mineralized, and only a tiny fraction has been dug up and classified by a paleontologist. As such, the majority of ancient species have never been found in the fossil record and classified.

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The fossil record is considered to be incomplete for a number of reasons. The primary factor in why the record is considered to be incomplete has to do with preservation and the science of taphonomy, or the science of how dead things become fossils.

When an animal or plant dies, typically the body decomposes and breaks down into small parts which are naturally recycled. In certain circumstances, though, the remains of a plant or animal are well-preserved by cold, heat, pressure, moisture conditions, and the presence of minerals. Fossilization occurs when water and minerals very slowly break into the remains of a living thing and replace existing structures. That's why fossils have the same shape and appearance of the dead thing but seem to be made of stone. Calcium is especially good at fossilizing dead matter.

What about all of the animals and plants that decompose and break down before fossilization could occur? These remains are a big part of the picture that we can't see. Only a very small portion of all the things which have ever lived and died have been fossilized for us to examine today. For some extinct plants and animals, we may only have one or two specimens to represent an entire species. It can be very difficult to accurately describe a species or its relation to others when all we have is a little chunk left behind. The fossil record is both incomplete quantitatively (meaning we only have a small number of fossils) and qualitatively (meaning the ones we have sometimes aren't so good.)

Another reason the fossil record can be considered to be incomplete is that there are still living beings! The fossil record is still developing as plants and animals die every day. As I mentioned above, most of these will decompose and disappear from memory, but under the right circumstances, some might go on to be discovered as fossils in the distant future.

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