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Digital refers to electronic technology that uses discrete values, generally zero and one, to generate, store and process data. In digital technology, data is transmitted and stored as strings of zeros and ones, each of which are referred to as bits. These bits are grouped together into bytes to represent data such as numbers, letters, images or sounds.
This method of computation is known as the binary system, and although it seems simple, it can be used to represent huge amounts of complex data, such as a song from iTunes or a downloaded movie. Prior to digital technology, electronic transmission was limited to analog, which conveys data as a continuous stream of electronic signals with varying frequency or amplitude. Computers only work with digital information and it has many advantages over analog, despite being less accurate. As such, it has become the most common way of storing and reading data.
Unlike analog data, which is continuous, digital data essentially consists of many small samples of a continuous stream, such as auditory and visual signals. How accurate the digital information is depends on how much information is included in each sample, and how accurately it is pieced together to represent the analog input.
Because digital data essentially estimates analog information, analog is actually more accurate. This is why some music enthusiasts swear that vinyl records sound better than ditial recordings, such as CDs and MP3s. Records are analog recordings, and are therefore closer to the actual experience of listening to the music live. However, unlike a vinyl record, a digital recording can be copied, edited and moved without a loss of sound quality. Digital data can also be stored much more easily; you can hold thousands of songs on a USB key, while you'd need a room full of records to hold the same amount of music.