Hard and Soft loops:

Loop is a signal back to the source of origin indicating that the path or the media through which it traveled was indeed a successful and continuous path, and not broken, damaged or non-viable. Loops are used to test and validate a network media such as a cable or an entire circuit which is a combination of several cables and junction nodes like network devices and equipment

There are two types of testing loops in the world of telecom: soft loops and hard loops

Soft loops are the ones which are generated by a software and as the name suggests, it uses software to interrupt or bounce the signal back to the source. These soft loops are virtual and non-physical loops, hence they won’t need manual intervention and can be given a number of times remotely.

Hard loops are the loops produced by physically plugging in the port/wire from the destination back to the source. That is, joining the media from destination back to the source in an effort to “look-back” the source signal received at the destination back to the origin. This requires a technician/engineer to manually unplug a cable from one port and plug it to another one and check the source for receipt of the loop signals/signs.

Software or Logical Loopback adapters:

There are logical or software based “loopback adapters” which are virtual interfaces found on operating systems and network equipment like routers/firewalls. These can be created within the network device or an operating system. These can be manually created by the user or automatically by the system for various purposes. Manual loopback adapters are used for troubleshooting or testing things out like adding a new IP address and hence creating a broadcast domain. Since software loopback adapters with different IP addresses create a new subnetwork, they can be used to check routing functionality. A software adapter will immediately be considered as UP and adds an entry in the local routing table. Some logical loopback adapters are also created by the system on the fly, many of which are called as virtual adapters – the most common use is for a VPN tunnel’s termination point which essentially needs a different IP subnet. 

In other words, a loopack adapter can route traffic from one port/interface to the other, but it is important to note that since it is a virtual adapter, it does not actually send or receive traffic – it does so virtually only, but physically it sends and receives through the physical ports only (NIC / Network Interface Card or Network equipment’s port)

Example: Microsoft Loopback Adapter, Cisco loopback interface, cisco interface vlan etc, dialer interface, bridge interface, vpn tunnel interface, vmware VMxnet adapters, 

Hardware or Physical Loopback adapter:

A physical loopback adapter, also known as a loopback plug or loopback connector, is a hardware device used in computer networking and telecommunications to test and troubleshoot network interfaces. It is designed to simulate a complete network connection by looping the transmitted signals back to the receiving end.

Hardware/Physical loopback is a simple short cable with a connector. The cable or connection within it loops the Transmit/TX and Receive/RX both together. This hardware loopback when connected to the network device’s port passes the electrical/light signals from TX to RX and RX to TX on the same port, fooling the port into believing that there is a device at the other end. Since the port receives a “loop”, the port comes up indicating a connection.

The purpose of the hardware loopback adapter is to test and diagnose network ports/interfaces at the most basic level – whether the port is working or not. These loopback adapters can also be made by network engineers or come prefabricated from a factory. These differ based on the interface type (copper or fibre/optical) and depending on the connector type (RJ45, SC/LC). These are only used for troubleshooting purposes, and not a part of everyday network equipment