Sources such as speech and images have a great deal of correlation from sample to sample. We can use this fact to predict each sample based on its past and only encode and transmit the differences between the prediction and the sample value. Differential encoding schemes are built around this premise. Because the prediction techniques are rather simple, these schemes are much easier to implement than other compression schemes. In this chapter, we will look at various components of differential encoding schemes and study how they are used to encode sources—in particular, speech. We will also look at a widely used international differential encoding standard for speech encoding.