It turns out that people can only hear 20 bits of resolution. So why 24-bit audio? It's (1) easier for computers to manipulate, and (2) when you mix several (or dozens) of 20-bit tracks together they can use up the extra bits to avoid clipping or overflowing.
It also turns out that the best analog-to-digital converters (ADCs) can only encode 20 bits. At 20 bits, minor temperature fluctuations in the resisters that make up the encoder can even flip a bit. So 20 bits is about the limit for recording a live performance.
The great Wendy Carlos* masters her new releases with a trick that emulates 20 bits of information in only 16 bits, so her latest CDs supposedly encode 20 bits of information. I'm not so sure myself, but since Wendy has shown herself to be the equivalent of a walking spectrum analyzer, I'm inclined to believe her.
Did you know that MP3 files can encode 24 bit audio? They can also encode a 48 kHz sampling rate, which is higher than CD. So, a well encoded MP3 file can in principle sound better than CD.
That's cool beans!
* Wendy Carlos created Switched-On Bach, which introduced the Moog Synthesizer to the public and became one of the most successful classical music albums ever produced.
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