Something big is going on right now. Almost imperceptibly--but very quickly--everything around us is getting smart. Our cars are learning to anticipate our moves. Our dishwashers are analyzing the water. Our toasters have stopped burning the toast. Thanks to tiny microcontrollers, we can now buy a blanket with a brain, an intelligent cat litter box, and a learning thermostat. And these are just the beginning. Before long, it will be the assumption rather than the exception that the products we buy will be equipped with embedded processors.

Embedded processors add minimally--like, maybe, a dime--to the direct cost of producing a product. So it's no surprise they're proliferating. Already, there are about 30 embedded processors for every CPU housed in a PC.

Another use of embedded chips is for tracking. Anyone who's driven a rental car equipped with a navigation system knows the benefit of tracking capabilities. A computer onboard the vehicle has been connected to orbiting satellites through a global positioning system (GPS). Essentially, the car transmits a beacon skyward; when three satellites have received it, the computer can fix the car's location within a car length and relate it to the maps stored in its database. As GPS technology continues to drop in price and size, it's easy to imagine this kind of tracking will be possible with even small objects--such as a FedEx package or your airport-checked luggage.

GPS gives customers an added sense of personal security because of its tracking capacity. This is also what the LoJack stolen-vehicle recovery system offers. Unlike a normal car alarm, which simply sounds off when it's jostled, LoJack has a way to call the police. A hidden transceiver on the car allows cruisers in the vicinity to get a fix on the location of the stolen vehicle and retrieve it quickly. How long can it be until PetTrac offers the same capability? PetTrac, if you haven't heard, is a product which implants microchips under the skin of household pets in the all-too-likely event they run away from home. When PetTrac is GPS-connected, Lassie will always make it home.

Ski resorts are already starting to embed chips in their ski passes, which allows them to track their customers' use of different lifts, trails, and amenities. Similarly, turnpike commissions are implementing microprocessor-based tracking that charges drivers for their use of a toll road without making them pause at a booth.

Now think about how microprocessor-enabled tracking could change your shopping. If it's possible to track even a six-pack of Coke, why have checkout clerks at all (and more to the point, checkout lines)? We'll just "shoplift" everything--and our bank account will get charged automatically by the scanner at the door.

The darker side, for many people, of connecting embedded processors is the huge potential it will create for stepping up surveillance efforts. Surveillance is already big business, but its high cost has meant that it's used only in limited ways. Connected embedded processors will make it cheap--and pervasive. The first real hint of what's coming is the system created by Net/Tech to ensure that employees who work in restaurants, cafeterias, and other food-handling jobs wash their hands after they use the rest room.

Here's how it works: An employee's name badge is equipped with a chip and a small light. When the employee enters a rest room on the premises, the chip activates an infrared connection with another chip in the doorway, and the light begins blinking. It will keep blinking until the employee spends at least 20 seconds in front of a third chip, located at the washbasin. If the badge blinks outside the rest room, it means the employee failed to wash his or her hands--a cause for disciplinary action.

Is all this a good thing? Certainly many people are nervous about the privacy issues involved. And in truth, it's inconceivable the world will stop at just checking whether you've washed your hands. What parent wouldn't sympathize with the idea of implanting a chip to enable the police to track a lost or abducted toddler? But then again, how many parents would be tempted to leave it in place, just to ease their minds, when Jimmy went off to college?

Malaysian Prime Minister Mahathir Mohamad received the first of Malaysia's new passports, which have a built-in electronic chip to store the holder's fingerprints, photograph and other personal particulars. The national news agency, Bernama, said the passports are the first in the world to incorporate such identity chips.

When Kevin Warwick walks into his office, doors open, lights switch on, and a digitized voice says, "Welcome, Professor Warwick." It also lets him know if he has e-mail and how many messages there are. And his secretary can glance at a computer screen and instantly find out where he is in the building, routing him a phone call or calling him for a meeting as appropriate.

He could have created the same effects by tucking a smart card into the pocket of his tweed jacket. But by opting to implant a small (23 mm by 3 mm) silicon chip under his skin, Professor Warwick claims to have become the world's first cyborg--part man, part machine.

The human as computer had many applications, Professor Warwick said. "Possibilities could be that anyone who wanted access to a gun could do so only if they had one of these implants. Then if they try to enter a school or building that doesn't want them in there, the school computer would sound alarms and warn people inside or even prevent them having access.

"In five years' time, we will be able to do chips with all sorts of information on them. They could be used for money transfers, medical records, passports, driving licenses, and loyalty cards. If they are implanted they are impossible to steal. The potential is enormous," he said.

His daughter quips that he's crazy, and his wife says that the experiment "turns her stomach," but the soft-spoken chairman of the Cybernetics Department at the University of Reading in England doesn't sound like a send-up from a sci-fi convention.

"I come from a background of machine intelligence, looking at how intelligent machines are likely to be in the future," says Warwick. "There is a school of thought that says that the way humans can keep up with machines is to have silicon implants helping our intelligence, but it's been a bit science-fictiony. I thought technically we can go at least part of the way in that direction, so I went and had a go at it. What I can do now is fairly limited, but it shows some of the possibilities."

The idea of man empowered by digital ability has always raised ethical issues and deeper questions about what it means to be human. Those issues get tougher as the distinction between man and machine blurs.

When humans started interacting with computers in a box in the 1950s, they called them tools. When students at the Massachusetts Institute of Technology in Cambridge, started wearing their computers in recent years, they called themselves "cyborgs."    Warwick's experiment brings the computer literally under the skin.

There are good reasons to do this, Warwick says: For example, such chips could connect up with the human nervous system and help people with disabilities. "Imagine yourself directly connected with a computer, with the memory capacity of that computer at your disposal. Imagine being able to visualize with X-rays, ultraviolet rays, ultrasonic rays, infrared rays--to see in every way that a computer can see: That's where the forefront of technology is," he says, in a phone interview.

MIT sociologist Sherry Turkle has been studying how people interact with computers since the late 1970s. "The question of how you define the boundaries of the body have increasingly been on people's minds as they think about the computer, because people are beginning to sense that the computer is coming closer and closer to the skin," she says.

She finds that when people are asked what they would be comfortable implanting if they had a chip that communicates directly with the brain, many make a distinction between instrumental knowledge, such as calculus or foreign languages, and a course on music or Shakespeare. They'll accept the chip's take on how to speak German but not on how to understand Goethe.

Ms. Turkle said, "Implanting a chip is not very far from wearing it on your glasses or having it in your ear. We find it disturbing now, but the question is, will we find it disturbing in 10 years?"

Also to be resolved: What if the applications for close-to-the-skin computing turn out to be not so warm and fuzzy. Researchers at Reading warn that smart buildings could evolve into more than a cheery "good morning" for workers.

"Within businesses, individuals with implants could be clocked in and out of their office automatically," the University of Reading Web site states. "It would be known at all times exactly where an individual was within a building and whom they were with…. Is this what we want?"

Of course, no company would really want that kind of control over its staff. Or would it? The evidence suggests that your employer wants to know much, much more about you--enough to tap your phones, read your e-mail and video your movements.

In the US, research by the American Management Association has revealed that 40 percent of companies keep a log of their workers' phone calls while 16 percent videotape employees.

Under current legislation, companies are permitted "within reason" to place all employees under constant surveillance. They are free to eavesdrop on telephone conversations, censor e-mail, install spy cameras, even analyze urine in the toilets to detect drug use.

Working at a bank in Zambia in 1993, Gary Beadle was in position to watch a curious African ritual unfold each day. One after another, dusty trucks backed up to a side door and as armed guards watched, men hurriedly dragged foot lockers and suitcases stuffed with cash into the bank. Money laundering? Hardly. Just a local merchant's daily cash receipts.

It seems leaders in Zambia--like other developing African nations--refused to print the country's currency in high denominations, partly because they couldn't afford to print bills every time inflation spiraled. The highest note in circulation was the equivalent of about 50 U.S. cents.

For Zambians, it was time to haul out the wheelbarrows. People carried wads of cash because checks and credit cards were unavailable. Mr. Beadle watched as restaurant patrons painstakingly counted hundreds of bills on the dinner table just to settle a tab. The well-to-do were easy marks: Bandits just looked for anyone with bulging pockets.

Mr. Beadle, a U.S. computer programmer who was designing customer identification cards for a Zambian bank, began to study the crash crunch. His solution: a smart card for Africa.

Smart cards? In Africa? Smart cards are those futuristic replacements for paper cash and coins that look like credit cards but use computer chips to store monetary values. Selling a 21st century payment system to some of the world's poorest nations sounds a little like trying to hawk cable service to people without televisions.

"It's definitely a niche market," said Mr. Beadle, president of Laguna Hills, Calif.-based Pep Smart Systems. "But we think it's going to be our market. Nobody else is really going after Africa."

He's right about that. Banking in Africa is tough. With per-capita incomes of about $600, few customers have enough money to need bank accounts. Installation of telephone lines largely stopped in the 1960s when the British and French began to pull out, so credit cards never caught on. Add to that AIDS, hunger and political instability.

But the 41-year-old Mr. Beadle is betting he can bring Africa's agrarian, cash-based economies directly into the Information Age by replacing their currencies with chip cards that aren't even widely available yet in the United States.

Since there were so few telephone lines, Mr. Beadle created a portable, self-contained device that could work in the most remote places, from a roadside flea market to a village fish stand. Money is transferred from the consumers' smart cards to the merchants' cards without the online umbilical cord needed by other systems. At the end of the day, the merchants simply take their cards to banks and download the cash receipts into their accounts.

Another challenge: Africa's notoriously bad electrical system, where daily blackouts can last a week. So Mr. Beadle's machine uses rechargeable batteries that can run off car cigarette lighters in a pinch.

Uganda-based International Credit Bank bought Pep's smart card system and installed it at about 250 retail establishments nationwide, including virtually every gas station in the country. In less than two years Pep's smart cards have become the most widely accepted form of payment after the Ugandan shilling, accounting for about $8 million in transactions a month, according to Patrick Katto, managing director at International Credit in Kampala, Uganda.

But so far, explaining to African consumers that their money is being stored on a piece of plastic has been a challenge. In the United States, "you have a card culture already," Mr. Katto said. "Here we are a cash society."

A new regulation that will require dog and cat owners to have their pets vaccinated against rabies and an identifying microchip inserted under their skin was received with approval by veterinarians and protest by some cat owners.

Until now, nearly 90,000 dogs have had such a chip inserted due to municipal by-laws in about 50 areas, according to Agriculture Ministry chief veterinarian Arnon Shimshony. But it will now become mandatory for pet dogs in the whole country, and a one-year experiment for cats. Israel has apparently become the first country in the world to require dogs and cats to have an identifying chip in their bodies, Shimshony said.

Scientists are utilizing the brain wiring of a tiny, transparent worm to run a prototype electronic robot that may one day be used to hunt for underwater mines, according to the Washington Post. The worm-inspired robot was developed by scientists at the University of Oregon and funded in part by the Navy.

They hope to use it as a model for an artificial eel that would use a computerized brain to think, sniff and move as efficiently as C. elegans does, the Washington Post reports. Scientists were able to map C. elegans' synapses -- the message-bearing connections within its nervous system -- because it has a mere 302 neurons, or nerve cells. By comparison, humans have 1 trillion.

"We don't call it artificial intelligence -- we call it biological intelligence," says Joel L. Davis, a program officer with the Office of Naval Research, which has funded Lockery's work. The foot-long robot moves exactly as a nematode would under a microscope. Eventually, Lockery -- and the Navy -- would like to adapt that sensing system to track the minuscule plumes of waterborne chemicals that leach from underwater mines, according to the Post. To do that, they would embed a microchip containing the nematode's chemotaxis instructions into an eel-like robot fitted with a chemical sensor.