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In Marvel's Agents of S.H.I.E.L.D. S01E05 titled "Girl in the Flower Dress", two individuals put on silver bracelets. It was inferred that they would inhibit the wearer's actions in some way.

What actions are they supposed to inhibit and how?

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From watching the show, I gathered that the bracelet will not only prevent the hackers from using technology, but it will also be tracking and monitoring them.
Coulson stated that the bracelet can put out a magnetic field that will prevent them from using technology.
So, S.H.I.E.L.D. will dictate when and where they can use computers, networks etc.
I wouldn't be surprised if the bracelets had other abilities as well, but this is all I can surmise for now.

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Skye wore the bracelet from episode 5 to episode 11. Since those have come and gone, and there’s no sign that Miles (Skye’s boyfriend) will be returning soon, we can probably make a complete list of what we know about the bracelet. Some spoilers for those episodes.

Here's a quick summary:

  • Tracked and restricted access of electronic devices, especially networked ones
  • Physical restrictions, especially within SHIELD buildings
  • Tracking of physical location

Here's a breakdown of what we see in the episodes:

The exact line from Coulson in Girl in the Flower Dress is:

Miles: What’s it do?

Coulson: Whatever we tell it to do. I’d try to avoid any unlawful activity and I think you’ll find it hard to use electronic devices for a while.

When Skye puts on the bracelet, she does so silently: neither she nor Coulson say anything about what it does.

Coulson’s description suggests that the bracelet is some sort of electronic tag, which monitors the wearer. Presumably illegal activity gets you a slap on the wrist (maybe an electric shock or an audible alarm) and a visit from your local SHIELD agent. The electronics comment suggests that it’ll disable any electronics it comes into contact with.

In episode 6, FZZT, Skye is still using the computers on the Bus, so the two bracelets seem to be configured slightly differently. She makes the tag comparison herself:

I even let them tag me like a stray dog. [holds up bracelet]

Later in the episode, she acknowledges the tracking capabilities of the bracelet:

Coulson: You found something on Cross?

Skye: Many things, actually, but you already knew that, thanks to my fancy SHIELD house arrest gizmo. Tracking my every keyswipe, my online activity, my cholesterol – I just wish it came in another colour.

Since she’s working for SHIELD, they have no reason to restrict her actions, but of course, if she tried to do something illegal or that they didn’t like, they could shut down her access.

In episode 7, The Hub, we see a more explicit limitation: when she tries to walk into a briefing room that she doesn't have clearance for, the bracelet glows red and gets clamped to the access panel by the door. Presumably the same thing would happen at any SHIELD facility if she tried to walk through the wrong door.

Is this your subtle way of saying I can’t come with?

You can imagine that a similar shock might occur if she tried to walk into a military base, or a bank vault, or drove off with a SHIELD car. It's a very convenient way for them to immobilise her until she can be picked up.

Later in the episode, she hacks into the SHIELD servers to find information about Ward and Fitz's mission using her laptop. Using the bracelet's tracking capabilities, Coulson comes in to scold her shortly afterwards. (Although, conveniently, he waits just long enough for her to find the important information.)

The bracelet comes off in episode 11, The Magical Place. Here we see what happens to Skye if she wanders off and then tries to use electronics: they immediately get disabled, with a big black SHIELD logo on the screen. Subtle. She uses this to great effect when trying to convince a businessman that she's a SHIELD agent: by disabling his phone with the SHIELD logo, she claims it as proof of her identity.

It's not clear why they didn't physically incapacitate her when she wandered off, say by sending a nasty shock through the bracelet. Perhaps this digital restriction is triggered automatically, and they reserve immobilising somebody for situations where another person's life is in danger. Unclear.

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