Our current methods for digital sound reproduction go something like this: digital sound signal is translated to analogue to travel down a wire to analogue speakers that produce the sound. This can result in a loss of quality, particularly if the cable is less than perfect. I notice that effect very often with my computer speakers. You need to ensure a good connection between all the components or you get further signal degradation, and the first thing you check when your sound is bad is the cable connections.
To maintain quality and minimise these effects, we need to push the digital-to-analogue conversion to be as late as possible. In this case, that means right up in the speakers, headphones or earbuds. The cables and connections need to carry digital signals so that even cheap cables can guard against signal loss quite effectively (just like all HDMI cables produce a perfect picture, no matter the price).
Mokalus of Borg
PS - This will make headphones and speakers more expensive, unfortunately.
PPS - It will also make a lot of equipment obsolete or at least incompatible.