Off on a tangent: Why stream at all? Would a bit of buffering take care of any jitter? Storage is so cheap and fast nowadays, would it make sense to buffer the next second, 10 seconds, entire song, whatever? I can see why real-time would be useful to anyone creating or manipulating music, but for listening, I don't see the need for streaming if it creates these complications. As a listener, I would accept the delay as "warm up" if you like. If jitter is caused as a result of the pieces arriving at different times (like in Tetris), why not just wait until you have enough usable pieces to avoid it?
Back on topic: So if one is truly not superior to the other, why are there different results within the same DAC that supports both? Shouldn't the output sound the same? The DAC I'm currently looking at is the Gamma 2 (by head-fi'ers amb and MisterX) and it supports both USB and SPDIF inputs but everyone greatly prefers the SPDIF inputs.
So if I want those SPDIF results, I'd need to get a USB to SPDIF dongle, which got me to wondering about if the signal is coming from USB to begin with, what does the dongle do that magically makes it this wonderful SPDIF signal, and why can't it just be done in the DAC and use fewer connections and cords? Everyone has USB on their computers nowadays, whether it's a netbook, laptop, or fullsize rig. No one has SPDIF unless they buy a sound card or dongle specifically for it. So why not only make USB DACs and do the USB to SPDIF inside the DAC. It can't cost more than the price of the "Musiland Monitor 02 USD (~$120 new)" or the "M2Tech HiFace USB Interface", right? And that would still keep it well under the $1K figure you mentioned. Or, if it would cost dramatically more, would it wrong to simply include one of those into the design of the DAC and just put it straight inside the case, hardwired to the rest of the DAC? Haha, looks like I've strayed back onto the tangent of creating a better DAC rather than just asking about the differences between interfaces. I have no electrical background or I would try it myself just to see. Or maybe if I did, I'd understand why you can't.
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Any thoughts on any of this? If you think you've already answered some of my questions, please chalk it up to my not understanding what you are talking about with "galvanic isolation" or any of the audio chips you mentioned, etc. I'm sure if this thread gets read by anyone outside the knowledgable responders thus far, any additional exposition will be greatly appreciated.
Update: thanks, nick for the test with your Zero. I wonder why people like SPDIF on the Gamma 2 more? Is it placebo? Groupthink?