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A sourcing output supplies current or voltage to the load. The output would be hooked to one side of the load, and the other side is grounded. A sinking output works by pulling the voltage or current to ground. In this case, the load is connected to the 'hot' power supply terminal, and the other end is connected to the sinking output. When the output goes active ("goes low"), current flows from the power supply, through the load, then to ground via the output terminal. Sinking outputs are sometimes called 'open collector' outputs. You can visualize it this way: Take a light bulb and hook one lead to the chassis of your car. You just grounded the load. Now take a wire and hook it to the positive battery terminal. When you touch the battery wire to the bulb, it lights. You are 'sourcing' current to the bulb. Now, connect the bulb to the positive battery terminal. Take a wire and connect it to the car's frame (ground). The bulb already has a voltage supply - the positive battery terminal. When you touch the ground wire to the bulb, sinking current to ground, the bulb lights. The big deal here is IC's that sink current typically have much greater current capability than those with sourcing outputs. So why even bother with sourcing outputs? Their main claim to fame is the load can be ground-referenced, which is very desirable in some situations.

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