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Cookies are a very important method for maintaining state on the Web. "State" in this case refers to an application's ability to work interactively with a user, remembering all data since the application started, and differentiating between users and their individual data sets.
An analogy I like to use is a laundry cleaner's shop. You drop something off, and get a ticket. When you return with the ticket, you get your clothes back. If you don't have the ticket, then the laundry man doesn't know which clothes are yours. In fact, he won't be able to tell whether you are there to pick up clothes, or a brand new customer. As such, the ticket is critical to maintaining state between you and the laundry man.
Unfortunately, HTTP is a "stateless" protocol. This means that each visit to a site (or even clicks within a site) is seen by the server as the first visit by the user. In essence, the server "forgets" everything after each request, unless it can somehow mark a visitor (that is, hand him a "laundry ticket") to help it remember. Cookies can accomplish this.
What is a Cookie?
A cookie is a text-only string that gets entered into the memory of your browser. The value of a variable that a website sets. If the lifetime of this value is set to be longer than the time you spend at that site, then this string is saved to file for future reference.
Where did the term cookies come from?
According to an article written by Paul Bonner for Builder.Com on 11/18/1997:
Lou Montulli, currently the protocols manager in Netscape's client product division, wrote the cookies specification for Navigator 1.0, the first browser to use the technology. Montulli says there's nothing particularly amusing about the origin of the name: 'A cookie is a well-known computer science term that is used when describing an opaque piece of data held by an intermediary. The term fits the usage precisely; it's just not a well-known term outside of computer science circles.'
Where Can I Get More Information?
There's a great article about cookies on Marshall Brain's
How Stuff Works. Worth a look!
The World Wide Web Consortium has an excellent FAQ to answer the majority of Internet and Web-related questions. You can read their topic:
Do 'Cookies' Pose any Security Risks?
Are Cookies a Threat to My Privacy?
The sad truth is that revealing any kind of personal information opens the door for that information to be spread.
Consider the growing trend of technology conveniences in our lives. We use "frequent buyer" cards at supermarkets and gas stations. We place electronic tags on our cars to pay tolls faster and easier. We let banks pay our bills for us automatically each month without checks.
While each of these technologies (and others like them) have made our lives more convenient, each time we use them exposes us to a loss of privacy. Stores know what foods you eat. Gas stations know how much you spend on gas per fill-up. Turnpike operators know how fast you drive on their highways. Banks know how you spend your money each month.
It's the same with cookies. In fact, one may argue that cookies in the long-run will be less damaging to privacy efforts than those technologies described above. If you're going to single-out cookies as your sole vulnerability to personal privacy, you should re-examine how you live your daily life.
The never-ending ethical debate associated with these facts shall be left to other forums. However, it is wise to consider carefully the information you collect and share over the Internet.
The above information is from The Unofficial Cookie FAQ by David Whalen.