An encoder is a crucial device that converts angular displacement or linear displacement into electrical signals. The angular displacement encoder is often referred to as the code disc, while the linear displacement encoder is called the code ruler. Encoders are essential in many industrial and automation applications, as they convert signals (such as bit streams) into formats that can be used for communication, transmission, and storage.

Encoders can be categorized based on their readout mode and working principle. Contact-type encoders physically interact with the surface of the encoder, while non-contact encoders rely on optical or magnetic methods for signal detection. Based on their working principle, encoders are classified into incremental encoders and absolute encoders. Incremental encoders provide relative position data, while absolute encoders offer precise and unique position data for each angle or position.