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Digital to analog converters — DACs — take digital audio signals and convert them into an analog signal that your amp can send as smooth, clear music and soundtrack audio to your speakers or headphones. A lot of audio components have built-in DACs. But some people hear a noticeable improvement in sound when they run their digital sources through an outboard DAC.
You can find standalone DACs for all kinds of sound system situations, from high-end, audiophile-grade sound systems to listening on your smartphone with headphones.