RFID stands for Radio Frequency Identification. It is a technology that uses a computer chip to store information, much like a barcode; unlike a barcode, however, which uses a laser to access the information, RFID uses radio waves. An RFID tag is generally a passive device which does not need a power source; it is activated by passing near an RFID reader. At the present time, it is used most frequently for inventory control in stores and warehouses, but RFID can also be placed in passports and even currency, to name just two.
One benefit of RFID is patient management in hospitals; for example, in Singapore during the SARS epidemic, all people entering Alexandra Hospital were given ID tags containing an RFID chip. These tags tracked when they exited and entered the hospital and kept this information in a database for 21 days; if one of them later contracted SARS, the hospital would already have a record of everyone the person came into contact with, hence enabling the hospital to contact those people and help slow the spread of the disease. A potential, but as-yet-unrealized, benefit of RFID is that if a washable RFID tag were embedded in the fabric of clothing and a washing machine had an RFID reader, the washing machine could automatically detect the clothing material, and adjust the water temperature and wash settings accordingly. No more shrunken wool sweaters!
One privacy concern associated with RFID is that if RFID tags are attached to the actual products themselves (e.g., to the 54" plasma flat-screen TV instead of to the box it came in), unsavory characters outfitted with RFID readers could prowl through neighborhoods and scan houses in order to determine which houses would be the most profitable places to rob. Another privacy concern is that, since RFID readers can be set to detect multiple items, if a person entered a place with RFID readers, the readers could pick up information about everything the person was carrying -- what wallet she owned, what handbag, etc. -- all without that person's knowledge.
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