There has been much controversy between proponents of DSD and PCM over which encoding system is superior. In 2001, Stanley Lipshitz and John Vanderkooy from the University of Waterloo stated that one-bit converters (as employed by DSD) are unsuitable for high-end applications due to their high distortion. Even 8-bit, four-times-oversampled PCM with noise shaping, proper dithering and half data rate of DSD has better noise floor and frequency response. In 2002, Philips published a convention paper arguing to the contrary. Lipshitz and Vanderkooy's paper has been criticized by Jamie Angus. Lipshitz and Vanderkooy later responded.
Fundamental distortion mechanisms are present in the conventional implementation of DSD. These distortion mechanisms can be alleviated to some degree by using digital converters with a multi-bit design. Historically, state-of-the-art ADCs were based around sigma-delta modulation designs. Oversampling converters are frequently used in linear PCM formats, where the ADC output is subject to bandlimiting and dithering. Many modern converters use oversampling and a multi-bit design. It has been suggested that bitstream digital audio techniques are theoretically inferior to multi-bit (PCM) approaches: J. Robert Stuart notes, "1-bit coding would be a totally unsuitable choice for a series of recordings that set out to identify the high-frequency content of musical instruments, despite claims for its apparent wide bandwidth. If it is unsuitable for recording analysis then we should also be wary of using it for the highest quality work."
When comparing a DSD and PCM recording of the same origin, the same number of channels and similar bandwidth/SNR, some still think that there are differences. A study conducted at the Erich-Thienhaus Institute in Detmold, Germany, seems to contradict this, concluding that in double-blind tests "hardly any of the subjects could make a reproducible distinction between the two encoding systems. Hence it may be concluded that no significant differences are audible." Listeners involved in this test noted their great difficulty in hearing any difference between the two formats.