Volumio (and especially MPD it uses) is able to play almost all formats (including Apple lossless, DSD128 and DXD) in bit-perfect fashion with the standard settings. Enabling all kind of mixers (like software volume control, equalizer, re-sampler etc.) forces Volumio to modify the bit stream and thus is not bit-perfect any more.
Biggest ‘challenge’ is when the Digital (bit-perfect) audio stream is Converted to Analog (D/A Conversion = DAC). The quality of the hardware handling this is very much having an effect on the actual listening experience. You can get DAC’s ranging from just a few euro’s to 10K+ euro’s. There is a quality difference in this big range.
Choosing a good DAC (for example an external one as you suggest) is important. My personal experience is that a good (doesn’t mean expensive) external DAC or the ones build-in in some A/V receivers/amplifiers can outperform the ‘simpler’ DAC’s that you connect directly to the RPi.
What remains is the matter of the transport of the digital stream from the RPi to the DAC:
The RPi has a good I2S interface using the GPIO pins. That’s one of the reasons to connect a DAC directly to this I2S interface so there is a short straight through signal path to the actual D/A converters. But again, it is the quality of these D/A Converters that affect the listening experience a lot. (See also some other topics on this forum about the sound quality of these type of DAC’s).
When using an external DAC there needs to be another way of transport.
- Asynchronous USB seems to be a good option because it allows the DAC to handle the correct timing (Master Clock). But unfortunately the USB bus of the RPi is not its strongest point. It actually only has 1 USB bus (which is used for all four ports like an USB hub AND also for the LAN port, which is actually a LAN2USB device) and it is also an OTG (On The Go) type as well. Connecting a DAC through USB doesn’t always give the desired results due to several (potential) issues with the USB bus. Some people report positive results while others do not.
- Another option is to get some kind of converter to convert the signal to Coax (Coaxial SPDIF) or Toslink (Optical SPDIF) and feed such a digital signal into the external DAC. Each signal conversion is a potential risk in introducing distortion but this is the trade off, some signal conversion to allow better D/A converters to do the most important conversion. In my opinion a good option is to get a good converter which uses the RPi I2S interface and creates a Coaxial SPDIF signal. Personally I like the sound of my DAC which gets its signal from a Hifiberry Digi+.
Don’t forget to use good quality cables and looking after a good power supply helps also.
Hopefully the above explains the possibilities and some of the pros and cons.