"Know static data is one copy from compromise Tony Sales ran a fraud operation employing roughly 300 people in restaurants and bars, each equipped with a card skimmer, because the magnetic stripe encodes the same information every single time it is used. He explains: "the problem is that the data on that magnetic stripe is static. So if you have a skimmer, you can clone the card in seconds and then reuse it again and again." The chip solved this by generating a unique cryptographic code per transaction, so even a perfectly captured code is worthless on replay. Whenever you are designing or evaluating any security system — passwords, badges, tokens — ask whether the credential is static; if it is, assume it will eventually be cloned. Source: Tony Sales & Derek Muller, Veritasium, How Your Credit Card Works — and How It's Being Hacked"