Radio Frequency Identification (RFID) is an automatic identification system. It is packaged as a 1mm square chip with a large antennae. Information is stored on the device which involves some sort of unique identification information. It contains no power source, but is powered by induction from the source attempting to read it. The information is transmitted out of it via radio frequency, in digital format. In this way the device has the potential to last forever, is portable, and discreet. Packaging includes a square paper backed adhesive, like those found in the back of books, or a long thin wire, like those found in jeans. RFID tags were developed as a cheap way to track crates, containers and pallets of goods as they pass through ships, customs, warehouses and retail stores.
Since then, RFID tags have started to appear in everything. Even credit cards! (See Blink) Retail stores use them to protect against shoplifters.
The more sinister privacy issues can easily be exposed. Where once we were anonymous people going about our own business, we now run the risk of being tagged potential customers, identified and marketed to. This information, like the entire telecommunications industry, will need to be subjugated and controlled by government as an important new tool for crime prevention. Really though, like all information not freely available to everyone, this new power will be abused. Already legislation has passed in some states of the US limiting tagging of people.
Security holes have already been identified, privacy groups are up in arms, tags are appearing in passports and clothing and everywhere. See RFID Viruses and Worms for a good case-study on RFID vulnerabilities.
More information and the history of RFID tagging can be found at the Electronic Privacy Information Center
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