I came across this new invention called "Sixth Sense" by a student
from MIT which demonstrates bringing the digital world into the real
world. The technology will be Open Source.

Here's a link to the presentation:
http://www.ted.com/talks/pranav_mistry_the_thrilling_potential_of_sixthsense_technology.html

I would like to hear your thoughts on how do you see this impacting
user interactions for better or worse in the future. 

One place that I've seen a similar experience being developed is the
XBox - Project Natal (http://www.xbox.com/en-US/live/projectnatal/)
which enables a user experience that is more likely the way people
interact with the real world, taking full advantage of human
perceptual capabilities. 
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