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It's a bitcrusher! It's not a finished product yet, but it the circuit is. Hook it up between a guitar and an amp and it's perfectly playable. The board on the bottom is an arduino microcontroller, which takes a 10 bit sample of your signal and converts it to 6 bit before spitting it out across the 6 white wires to a handmade digital-to-analog controller. PM me if you want to see the source code. The USB cable is just providing power to the circuit.
As for the sound, it's really cool. It's a great lo-fi distortion reminiscent of old DOS games (think Doom and Duke Nukem 3D). I'll upload a demo video if there is any interest.
I'm at work right now but I will post a schematic of the whole circuit when I get home. In the meantime check out http://arduino.cc for more information on the microcontroller I'm using. Basically it's an atmel AVR chip with a special bootloader that runs programs written in a variant of C++. The rest of the board is voltage regulator, USB interface for programming, and breakout headers for the I/O pins. In this application it's serving as a really crude DSP.
you could also just skip this silly software non-sense and use an 8 bit ADC going into that same R2R resistor ladder DAC. if you discard LSB 2 bits, I would think that the input volume to the dac should be made hot to compensate for this crappy 6 bit resolution. you can save yourself the trouble of making an R2R ladder, you can just buy them pre-made in SIP from mouser. check under resistor arrays + networks. follow the datasheet and the marking on the SIP package.