Normally if you get your dog from a shelter they put a microchip in the dogs neck so if the dog gets loose or lost and the shelter pics them up they scan them and your name comes up and address and your information and such comes up.. im sure someone else will be able to explain it more thoroughly but thats basicly it Simba has one he also has a little "S" tatooed in his ear, i duno what thats for but we say it stands fo "simba"