Signaling, the method used to transmit digital information from one location to another, is central to the design of digital systems. A signaling convention involves encoding information into a physical quantity (typically current or voltage), generating a reference against which this quantity is measured, providing terminations to couple signal energy into the transmission medium and absorb energy to prevent unwanted reflections, and controlling signal transitions to limit the spectrum of transmitted energy. To a large extent, the signaling convention determines the reliability, speed, and power consumption of a system. A good signaling convention isolates a signal from noise to provide noise immunity. It does not attempt to overpower the noise with noise margin. Most signaling conventions in common use are actually quite poor because they are based on standards that are accidents of history rather than on careful design to isolate noise sources. For this reason, many modern systems define their own signaling conventions rather than employ these standards.

A major factor in the design of a signaling convention is the output impedance of the driver. A very low-output impedance (nearly zero) gives voltage-mode signaling, whereas a very high impedance (nearly infinite) gives current-mode signaling. An output impedance matched to the line gives source-terminated signaling, whereas a higher, but not infinite, impedance gives underterminated signaling. Current-mode or underterminated signaling is usually preferred because these conventions obviate the need for accurate transmitter and receiver voltage references.