Differential pulse-code modulation (DPCM) encodes signals by taking the difference between the current sample and a prediction of the next sample based on previous samples. This difference signal has a smaller range than the original signal and can be more efficiently quantized and encoded. DPCM uses a feedback loop where the difference is quantized, sent to the receiver, and added to the previous reconstructed sample to estimate the current sample. Adaptive delta modulation is a variant of DPCM where the quantization step size varies depending on the number of consecutive bits in the same direction to reduce errors. DPCM can reconstruct signals sampled above the Nyquist rate but may suffer from error drift or error propagation issues over multiple samples.