Active RFID tags have a radio transmitter and usually their own power source (typically a battery but they can also harvest the power from external sources). The power source is used to run the microchip's circuitry and to broadcast a signal to a reader (the way a cell phone transmits signals to a base station). They usually don’t need to be solicited by a reader.
Passive tags have no radio transmitter. They backscatter a radio signal sent by a reader to communicate and send information. As they do not require a large amount of power to operate, they can draw power directly from the reader, which sends out electromagnetic waves that induce current and voltage in the tag's antenna. These battery less tags have therefore a quite infinite theoretical lifetime.
Some passive tags can use a battery to run the chip's circuitry or embedded sensors, but they still communicate by backscattering the radio signal from the reader. They are called Battery Assisted Passive (BAP) tags.
Active and BAP tags are useful for tracking high-value goods that need to be scanned over long ranges, such as railway cars on a track, but they cost more than passive tags, which means they can hardly be used on low-cost items.
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