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SPDIF stands for Sony/Philips Digital Interface. This interface allows digital audio to be transmitted. As the name suggests, Sony and Philips were involved with developing the primary design of the interface. Digital audio is the type of audio where the data has been encoded as numerical samples (0s and 1s) in a continuous sequence. Whereas, in the case of analog, the data is stored in the form of signals.
The two formats available that allow transmission of audio are SPDIF and HDMI. While HDMI (High-Definition Multimedia Interface) transmits audio and video, SPDIF is limited to audio.
Types of SPDIF
There are two kinds of SPDIF connections available at the consumer level, they are:
When the signal is transmitted through a coaxial connection, it is usually through RCA connectors.
When the signal is transmitted through an optical connection, it is done so through a fiber-optic cable which has TOSLINK connectors in them.
Why do we need SPDIF?
This might make you wonder why we need to even bother settling or investing in an SPDIF system at all, this is because all video/audio equipment has an HDMI output available. This is because if you need to connect two audio devices, you will need to make use of SPDIF, this is because the audio source might not have an HDMI output.
Consider a professional-grade CD player, this device will not have an HDMI output as there is no reason for it to transmit video, this will only be equipped with a SPDIF output. As it was discussed earlier, if two equipment needs to be connected using, there are two possibilities. But the two has to have compatible connector types. If your CD player has an optical SPDIF output and your audio receiver a coaxial SPDIF output, you are not going to be able to jam into your groove or listen to your music anytime soon.
The parameters of the scenario above are only applicable in the case of an equipment equipped with both HDMI as well as SPDIF outputs and you only wish to connect audio and not the video. If you plan to connect your PC to your home theater setup to take advantage of the sound system but do not wish to transmit the video, you can send only the audio by making use of the SPDIF connection.