Overall, though, a digital camera can go most anywhere a film camera can go, with the usual precautions, naturally. Keep it clean and dry, of course, and cushion it from impact. You'll want a case to protect the camera when you're walking with it, and when it's in your pack. You don't say what camera you have, but I'll assume it's one of the ubiquitous point-and-shoots. For those, Lowepro's reasonably priced D-Res 8S is just the ticket ($13; www.lowepro.com). It's actually designed for compact digital cameras and includes a slot for memory sticks. A padded case protects the camera from bumps. Lowepro's Topload Zoom Mini ($21) accommodates slightly larger digitals or compact SLR-type cameras.
There are various places to store a camera when hiking. Dana Design makes a pack add-on called a Wet Rib ($29; www.danadesign.com) that straps across your midsection, a well-protected place from an impact perspective. This unit holds a water bottle, candy bars, and a small camera very nicely. Small cameras in a case also can be attached by threading your pack's sternum strap through the case's belt loop. Throw the case's strap around your neck for extra security if you must. Otherwise, just keep the camera at the top of the pack. But, in my experience, that also means it almost never gets used.
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