It is Radio Frequency ID, a controversial chip such as the ones used in wireless keyboards and mice, that is now being put in new passports and merchandise at stores.
The Advantages: Seamless connection with technology and more convenience. For example, they are used to track trends in merchandise sales, to prevent theft (they are those little tags that set off alarms in stores), race timing, and as a new alternative in libraries to the check out cards they place at the back of books.
Disadvantages: These RFID chips have caused much concern, as if they get hacked, the hacker could find personal information about them. Many are concerned that identity thieves or terrorist who target only Americans will exploit this.
The RFID chips can be very useful when used in the right way, and there is a way to prevent hackers from gaining access to them. Buy or make your own shielding cage (the newer ones have started shipping with cases). The sheilding cages are effectively mini Faraday Cage
s wrapped in cloth (for style). A faraday cage is a enclosure of metal that surrounds, but cannot actually touch the object inside. It disrupts the signal so that the RFID can only be read when it is opened.