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TFT (Thin Film Transistor) is a type of LCD display and is not related to touchscreen technology in any way; a better question would be, "What is the difference between resistive touchscreens and capacitive touchscreens?"

Resistive screens are an older design, in which two electrically conductive layers are separated by an insulating gap. When pressure is applied, the resistance between the layers changes at that point. While cheap and reasonably durable, they require styluses, don't support multi-touch and can reduce the quality of the displayed image.

Resistive screens were used in the original Palm Pilot and later Palm devices, in some portable games like the Nintendo DS, and in some current applications where their low price outweighs their limitations.

Capacitive touchscreens use newer technology that also relies on electrical conduction, but senses changes in capacitance rather than resistance. Since human skin conducts electricity, moving a finger near the electrostatic field of a capacitive touchscreen will change the field, and the change can be measured and interpreted as a touch. Although they can be triggered by metallic objects, cloth, and other materials and are more expensive than resistive sensors, capacitive screens don't require syluses, support multi-touch, and can be made perfectly transparent.

Capacitive screens are used in many new smartphones and tablets, including the iPhone, iPad, the Droid Incredible, Blackberry Storm, etc. The iPod trackwheel is an example of this technology used without a display.

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