To Walt’s point above….GPS altitude and altitude encoder provided pressure altitude are two distinctly different measurements. They are generally “close” to the same, but are often different by more than 100 feet. The ENTIRE air traffic control system in the US is based on everyone using pressure altitude…..so throwing a GPS altitude reading into that doesn’t meet the FAR requirements for mode C (see Walt’s comment), and sort of screws up the data in the system for all of us.
Also, GPS altitude does show more significant digits (the nearest 10 feet, if I remember correctly). An altitude encoder reports altitude rounded to the nearest 100 feet. But again, because the ATC system can only see altitude to the nearest 100 feet, sending altitude to the nearest 10 feet doesn’t do any good. Besides that, your transponder likely rounds to the nearest 100 ft before sending the data out anyway.