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Dynamic Microphone - A Dynamic Microphone uses a round plastic or rubber disk connected to a wire coil in order to turn sound into electricity. Basically, the sound wave will hit the disk which vibrates as a result. This vibration will move the coil back and forth near a magnet very quickly in order to create an electrical current. This is the exact opposite of a speaker which uses an electrical current to move the coil, which moves the disk. Then the disk makes sound.
Condenser Microphone - A condenser microphone uses two small metal plates to create an electrical current. Basically two small metal plates are placed right next to each other and electricity is run through the plates. This creates an electric field in between the two plates. When sound hits these plates, the plates vibrate. The vibration makes small changes in the electric field. These changes create the electrical signal.