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What is loopback and how does it work?

Loopback refers to taking the output of a device and routing it back to the input of the same device. For audio converters with an onboard DAC and ADC there are two kinds of loopback: digital and analog. When using digital loopback, the output of the device ADC is routed back into the input of the device DAC. When using analog loopback, the output of the DAC is routed back into the input of the ADC. Loopback is frequently used in testing including system buit-in test.