The difference between balanced and unbalanced cable is an extra conductor in the wire. An unbalanced connection runs two conductors, a hot (+) and a ground. A balanced connection runs three conductors, a hot (+), a cold (-), and a ground. What makes the difference is not in the cable but in what happens at either end, before and after the signal travels down the cable. Any cable can be an antenna and a noise collector.
First lets look at balanced connectors.
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You can see that they come in two common forms, one is an XLR or cannon plug and the other is a TRS 1/4" connector. Don't confuse this balanced connection with the balanced connector that's used on some consoles. On a number of Mackie consoles for instance, they use a TRS to run an insert in and out of the board. This is not balanced but using the three connections as in, out and ground. One connector does the job of two and it's not balanced.
What makes a balanced connection work, is some electronic trickery that makes the noise on the line phase cancel itself out of existence. (Remember our feature on Phase?) Here's how it happens. A balanced connection first runs through a differential amplifier which splits the hot signal into two and flips one half 180 degrees out of phase. This travels along the cable as plus and minus along with the ground on three separate conductors (on an XLR, pin 2 is hot, pin 3 is cold and pin 1 is ground). Along the way, the usual noise is encountered and picked up by the line. At the other end of the connection, the minus is flipped back into phase and you end up with a plus and a ground again, just as it was when you started. The difference is, that now the noise is out of phase with itself and cancels completely.
The above comes from the About.com homerecording section.
About.Com Home recording
Carl
