A digital signal refers to an electrical signal that is converted into a pattern of bits. Unlike an analog signal, which is a continuous signal that contains time-varying quantities, a digital signal has a discrete value at each sampling point. The precision of the signal is determined by how many samples are recorded per unit of time. For example, the illustration below shows an analog pattern (represented as the curve) alongside a digital pattern (represented as the discrete lines).

A digital signal is easily represented by a computer because each sample can be defined with a series of bits that are either in the state 1 (on) or 0 (off). Digital signals can be compressed and can include additional information for error correction.

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Characteristics of Digital Signals
1. Bit interval
It is the time required to send one single bit

2. Bit rate
(i) It refers to the number of bit intervals in one second.
(ii) Therefore bit rate is the number of bits sent in one second as shown in fig.
(iii)Bit rate is expressed in bits per second (bps).
(iv)Other units used to express bit rate are Kbps, Mbps and Gbps.
1 kilobit per second (Kbps) = 1,000 bits per second
1 Megabit per second (Mbps) = 1,000,000 bits per second
1 Gigabit per second (Gbps) = 1,000,000,000 bits per second

Advantages of Digital Signals
Digital Data - Digital transmission certainly has the advantage where binary computer data is being transmitted. The equipment required to convert digital data to analog format and transmitting the digital bit streams over an analog network can be expensive, susceptible to failure, and can create errors in the information.
Compression - Digital data can be compressed relatively easily, thereby increasing the efficiency of transmission. As a result, substantial volumes of voice, data, video and image information can be transmitted using relatively little raw bandwidth.

Security - Digital systems offer better security. While analog systems offer some measure of security through the scrambling of several frequencies. Scrambling is fairly simple to defeat. Digital information, on the other hand, can be encrypted to create the appearance of a single, pseudorandom bit stream. Thereby, the true meaning of individual bits, sets of bits, or the total bit stream cannot be determined without having the key to unlock the encryption algorithm employed.

Quality - Digital transmission offers improved error performance (quality) as compared to analog. This is due to the devices that boost the signal at periodic intervals in the transmission system in order to overcome the effects of attenuation. Additionally, digital networks deal more effectively with noise, which always is present in transmission networks.

Cost - The cost of the computer components required in digital conversion and transmission has dropped considerably, while the ruggedness and reliability of those components has increased over the years.

Upgradeability - Since digital networks are comprised of computer (digital) components, they are relatively easy to upgrade. Such upgrading can increase bandwidth, reduces the incidence of error and enhance functional value. Some upgrading can be effected remotely over a network, eliminating the need to dispatch expensive technicians for that purpose.

Management - Generally speaking, digital networks can be managed much more easily and effectively due to the fact that such networks consist of computerized components. Such components can sense their own level of performance, isolate and diagnose failures, initiate alarms, respond to queries, and respond to commands to correct any failure. Further, the cost of these components continues to drop.

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Source: ecomputernotes