RFID (pronounced "arfid") is short for Radio Frequency Identification. This generally takes the form of small "tags", about the size of a grain of rice, and a "reader". The reader sends out a radio wave, and the tags "respond" to the radio wave with information embedded on them. Tags can be passive (they're powered by the radio wave, and generally work within 30 feet or so) or active (they have a tiny battery attached, which allows for greater range). The tags can actually be as small as dust, but their range decreases at tiny sizes.
RFID tag compared to grain of rice:
Hitachi RFID dust chips:
For example, when pets are "microchipped", it's done with RFID tags. A tag is injected into the pet's body via syringe, and the owner's personal information is associated with the date on the tag. When a pet is found without a known owner, someone can scan the animal for a tag. Chipping pets is actually mandatory in some jurisdictions.
RFIDs are also embedded in automotive tires, livestock animals, shipping pallets, credit cards, competitive athletes' clothing, etc. Adventurous tech folks even embed them in their hands, to use as authentication devices for things like doorknobs or keyboards.
As the cost of RFID technology comes down, consumer applications become more viable, among them tracking tools. This technology is already used to track expensive surgical tools, but it also has the potential to adequately address a significant hobbyist problem: losing tools. Years ago, Ford and Dewalt came out with "Ford Tool Link by Dewalt", which used RFID technology to track tools stored in a truck. So, the truck owner could hit a button on his dashboard, and he would see a message like: "Missing: circular saw and 5/16" nut driver". I don't know that Tool Link ever made it to market, or if it was just intended to showcase the concept.
Ford Tool Link by Dewalt:
This same tool tracking concept is applicable to tool boxes:
I'd really like to see this emerge as an affordable solution for home shops. Yes, you would have to apply a chip to each and every tool (or, say, apply one chip to a case of drill bits), and you would need a reader or two installed in your shop. However, you could close up your shop at night, press a button on your RFID reader, and then see a message like: "1,372 tools accounted for".
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