Well said, Fineberg. XRCD's are still 16 bit but use a special high quality mastering process to derive the 16 bit CD data from a higher resolution source.
BTW, the HDCD processor samples at 88.1 khz and 20 bits (if I remember correctly). It applies psychoacoustic priniciples to reduce the data stream to 44.1 khz and 16 bits. The HDCD encoder applies a fixed set of processes to perform the data reduction. It encodes information on the process used at a given moment by modulating the low order bit of the 44.1 khz output stream.
The HDCD decoder in your player/processor decode this information and applies the appropriate inverse process instant-by-instant to the 44.1 khz 16 bit data stream from the HDCD to generate a 44.1 khz 20 bit stream for the DACs.
Also the HDCD decoder incorporates a reconstruction filter that is a perfect complement to the filter applied on the encode side.
BTW, the HDCD processor samples at 88.1 khz and 20 bits (if I remember correctly). It applies psychoacoustic priniciples to reduce the data stream to 44.1 khz and 16 bits. The HDCD encoder applies a fixed set of processes to perform the data reduction. It encodes information on the process used at a given moment by modulating the low order bit of the 44.1 khz output stream.
The HDCD decoder in your player/processor decode this information and applies the appropriate inverse process instant-by-instant to the 44.1 khz 16 bit data stream from the HDCD to generate a 44.1 khz 20 bit stream for the DACs.
Also the HDCD decoder incorporates a reconstruction filter that is a perfect complement to the filter applied on the encode side.