In the retail world, the introduction of radio frequency identification (RFID) chips is underway. These tiny computer chips can communicate wirelessly with distant readers and are widely used in, for example, mass transit. London's new bus and tube tickets work this way.

When you add them to something valuable you want to track and trace, such as a cow, they are known as smart tags. When you add them to a can of beans, they become a sort of clever bar code (known as electronic product codes, or EPCs) that can be read through boxes and packaging. When you add them to underwear, they're known as X-ray specs (at least by me): one US consumer group has advocated a boycott of Benetton for just this reason.

The interest from the retail sector is understandable, because the introduction of smart tags and EPCs will mean substantial economic benefits: small improvements in the supply chain can mean big savings, which can be passed on to customers. Wal-mart is requiring its top 100 suppliers to smart tag their products by 2005, and others are certain to follow.

The picture of retailing induced through this technology is appealing: every case of beans will be identified and tracked from production, through warehouses and distribution networks, to the supermarket shelf, and into the shoppers' basket (and home).

There are aspects to this revolution, however, that demand further thought. If, for example, every case of beans has a smart tag that can be tracked around a warehouse by readers a few metres away, then criminals could save a lot of time at truck stops by driving around with a reader to find out which container has beans and which container has cigarettes.

For the simply curious, the idea of an add-on for your mobile phone that could read tags is a delight. Who wouldn't want to stroll around a friend's house at a party and know exactly what they had in their wardrobes? Looking into handbags and pockets would, given human nature, be an irresistible temptation that technology would fulfill with ease.

Now, of course, the government could demand that retailers disable the tags when the goods leave the shop. But how would Marks & Spencer switch it back on when the customer returns the sweater because it is the wrong size? The consumer could benefit greatly if his washing machine could read the tags ("warning: that blue sweater should be in a cold wash"). Imagine medicine bottles that could warn for contraindications or plugs that could reject incorrect fuses.

We must adjust to the fact that the tags will be ever-present and devise technical and legal security infrastructures for their use. Think how much time it could save on that first date if your iPaq could tell you the colour and size of your companion's underwear?

Smart tags are a genuine benefit: but smart security will be required to make them work in the mass market.