What is 'SIM'?

A SIM is an abbreviation for Subscriber Identity Module. It is a smart card that securely stores the key identifying a mobile subscriber. SIM is commonly used in a GSM phone. The card holds a microchip that stores information and encrypts voice and data transmissions, making it close to impossible to listen in on calls. It also stores data that identifies the caller to the network service provider.
SIM cards are small smart cards that fit inside phones based on the GSM technology. SIM contain personalized information about its user including the network activation and phone book entries. One can put his SIM card in another GSM phone and use it as if it was his own phone.