Radio frequency identification (RFID) uses radio transmitters to read data stored in tag-based transponders at distances. RFID technology is used to track assets, manage inventory and authorize payments. Walmart is one of the biggest adopters of the technology. So far that's the first thing the world can thank them for!
RFID tags contain a silicon chip, for data storage, and a miniature antenna that receives and sends signals to an RFID reader. The tag and antenna are typically printed or etched on an electronic substrate, which is then embedded in a plastic or laminated paper tag.
RFID tags can be passive or active. Passive is the most popular, because this is the cheapest tag. In the passive case the antenna harvests some of the energy that the RF scanner shines on it, converting it to direct current by means of a detector circuit. Passive tags can only be read from about 20 feet, because of the limitation placed on the scanner output power. These tags cost about $0.25 now, and some day they will cost less than $0.01. At this point there will be no limitation on what is tagged with RFID!
Active RFID allows user-programmable data storage. The Exxon Mobile SpeedPass is an example of an active RFID tag.