The history of RFID is a little controversial, but it all began with Leon Theremin. Theremin was a Russian inventor who devised a musical instrument, appropriately named the theremin, in 1919. The theremin was the world's first contactless musical instrument, consisting of a box with two antennae coming out of it. The musician played the device by waving his hands around each antenna. One antenna changed the volume; the other changed the pitch.
Theremin later moved to the United States to start a laboratory in which he patented the theremin and sold his rights to RCA. He lived in New York City for several years, before—according to some stories—he was kidnapped by the KGB and forced to return to Russia to work in a sharashka, an informal name for the secret research and development laboratories in the Soviet Gulag labor camp system (http://en.wikipedia.org/wiki/Sharashka). Theremin also invented "The Thing."
"The Thing" was a passive bugging device that used RF transmission technology. Theremin invented "The Thing" for the Soviet government as an espionage tool. It worked by using sound waves to vibrate a diaphragm. The vibrations slightly altered the shape of the resonator that, in turn, modulated the reflected radio frequency.
Even though this device was a passive, covert listening device, not an identification tag, "The Thing," known as the first bugging device, is the predecessor to RFID technology, because, as is the case with modern passive RFID tags, "The Thing" only operated when it was activated by radio frequencies transmitted from an outside source. At all other times, "The Thing" was dormant and, in that state, nearly undetectable.
In 1946, Soviet schoolchildren presented a two-foot wooden replica of the Great Seal of the United States to the U.S. Ambassador to Russia, Averell Harriman. It was then placed in Moscow's Spaso House, the diplomatic building where all U.S. Ambassadors to the Soviet Union lived. During a routine security check in 1952, agents found a listening (or "bugging") device within the seal. The discovery meant that the bugging device had been in operation for six years before being detected.
After agents found the bugging device and researchers determined its purpose, their findings were presented to the United Nations. Soon after the presentation, agents reported over 100 similar devices found in U.S. residences and missions throughout Eastern Europe and the U.S.S.R.
An important point about this passive bugging device that still holds true today is that standard detection methods to locate RF communication devices did not find or identify "The Thing," since it went undetected for years. Modern RFID systems may pose the same risk today.
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