I’ll try to give a reasonably simple explanation …
Normal “unbalanced” audio, such as used by pretty much all of your consumer audio gear consists of two wires: the ground wire, and the signal wire. The actual “signal” as measured by the receiver, is the difference between ground and the signal line.
As the signal travels down the wire, it gets exposed to electrical noise in the environment, and like an antenna, picks some of it up. By the time the signal reaches its destination, `signal` becomes `signal + noise`.
There are various ways to combat this, such as turning the ground wire into a hollow tube called a “shield”, and encasing the signal wire inside of the tube, to protect it against noise. Signal strength, impedance, endpoint termination, and other factors can also be taken into account.
I think AT&T invented balanced audio back in the day. Basically, at the source, you transmit *three* wires: ground, +signal, and -signal. This can be done through a simple transformer, or via active electronics.
At the receiving end, the receiver takes the difference between `+signal` and `-signal`, ignoring ground. This is your audio signal. Again, this can be done with a simple transformer or via active circuitry.
What makes this clever is that as the wires pass through any zone of electrical noise, that noise gets added to both wires equally. So the receiver receives `+signal+noise` and `-signal+noise`. When the receiver takes the difference, the noise cancels itself out.
In fact, the wires are typically twisted just to make sure that both wires are equally exposed to the noise. Microphone cables actually have two `+signal` and two `-signal` wires, all alternating and twisted, to make *sure* they all get an equal dose of the noise.
Fun fact: ethernet cables, such as Cat-5 and beyond, have four pairs of signal wires (and no ground at all), and each pair is twisted at a different rate to make sure they don’t transmit signals to each other (crosstalk). For this reason, you can’t just wire an ethernet cable randomly, you actually have to pay attention to which wire goes to which pin on the connector.
Another fun fact: not too long ago, someone realized that if the ground wire in unbalanced audio is not connected directly to the actual ground, but instead is connected with the same termination resistance as the signal wire, you get the same advantage as balanced audio. We may be seeing a change in wiring standards in the not too distant future.
Source: used to be the chief operator of a radio station.
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