From the February 2007 Idaho Observer:

Hitachi unveils RFID "powder"

Just last month we frontpaged the story about invisible RFID ink being available. This month it is page 6 news that RFID chips the size of grains of sand are now available. The world’s smallest and thinnest RFID tags were recently introduced by Hitachi. Tiny miracles of miniaturization, these RFID chips (Radio Frequency IDentification chips) measure just 0.05 x 0.05 millimeters. The previous record-holder, the Hitachi mu-chip, is just 0.4 x 0.4 millimeters. The mu-chip RFID tag looks like a grain of sand on a human fingertip.

Hitachi’s new RFID tags the "powder type" tags are some sixty times smaller than the mu-chip and about one-sixth the diameter human hair) The new RFID chips have a 128-bit ROM for storing a unique 38 digit number, like their predecessor. Hitachi used semiconductor miniaturization technology and electron beams to write data on the chip substrates to achieve the new, smaller size.

Hitachi’s mu-chips are already in production; they were used to prevent ticket forgery at last year’s Aichi international technology exposition. RFID ‘powder,’ on the other hand, is so much smaller that it can easily be incorporated into thin paper, like that used in paper currency and gift certificates.

Science fiction fans will have a field day with this new technology. In his 1998 novel "Distraction," Bruce Sterling referred to bugged money:

They always played poker with European cash. There was American cash around, flimsy plastic stuff, but most people wouldn’t take American cash anymore. It was hard to take American cash seriously when it was no longer convertible outside U.S. borders. Besides, all the bigger bills were bugged. (Read more about bugged money)

These tiny RFID tags could be worked into any product; combined with RFID readers built into doorways, theft of consumer goods would be practically impossible.

These devices could also be used to identify and track people. For example, suppose you participated in some sort of protest or other organized activity. If police agencies sprinkled these tags around, every individual could be tracked and later identified at leisure, with powerful enough tag scanners.