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Playing sound on a computer began with a single beep on the PC. Gradually, PC computers were capable of playing simple beeps of different lengths and pitches as game music, although it did not sound very realistic.
In the 1980's, sound technology increased tremendously with the creation of an add-on card controlling sound. This gradually developed into the complex card known as a sound card, which is responsible for capturing and recording sounds from outside sources, and for inputing outside sounds onto the computer.
When someone speaks, the sound of their voice creates a wave that travels through matter, and another person hears the sound when the wave physically vibrates their eardrums - this type of sound is called analog. However, when a computer transfers sound, it is done digitally through electrical impulses creating binary codes. Because sound within a computer and throughout matter travel differently, a sound card must translate between analog and digital information, aka sound matter and bits and bytes.



Soundcard

Sound card

A basic sound card consists of four major components:
a digital-to-analog convertor (DAC), an analog-to-digital converter (ADC), An ISA or PCI interface to connect the card to the motherboard (http://wwstechnology.wikia.com/wiki/Motherboard)
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and input and output connections for a microphone and speakers.
Some more advanced cards contain two DAC and ADC convertors together, and it is called a CODEC.
In order for a sound card to translate analog sound to digital, it mathematically measures the waves of sound at different intervals and digitizes it. The number of measurements per second is measured through the sampling rate, or kHz. The more perfect your sound card's kHz is, the more identical your sound will be on the computer or coming from the computer. The DAC is capable of then translating digital into analog by creating the same measurents, and can often make the sound identical to its originol analog wave form. Below is a diagram of the measurements made by an analog-to-digital convertor.
Images
References: http://computer.howstuffworks.com/sound-card2.htm
http://www.ehow.com/how-does_4568118_sound-card-work.html
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