CDs are considered lossless.

"Lossy" and "lossless" are descriptors applied to data compression systems. So no one referred to CDs as "lossless" until MP3 (which is lossy) became popular, because there was nothing to contrast it with. CDs are not compressed at all.

If you buy music on BandCamp, FLAC (lossless) is often (always?) one of the download format options. FLAC is decompressed into a bitstream that matches the original exactly. You can put those files wherever you like.

I don’t miss carrying around or worrying about having stolen my cd collection, so smaller definitely would be better imo. I really liked the size of mini discs but they were too thick. Maybe about a quarter of that size and thinner cartridges made with solid state technology, made bigger than current tech allows in exchange for longer lifespans.

It sounds like by "quality" you are talking about the physical fragility of the CD. True, a more modern format might be nice, with a bump to 24 bit depth. I would want something a little more collectible than a thumb drive though.

I say this as an avid CD buyer who rips full quality to a Plex server. Also download from Bandcamp.