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Everyone Online! Google's Schmidt on Benefits and Risks

Though the next 5 billion people who connect to the Internet will experience a better quality of life and improve society, technological advances can also "empower some evil people," Eric Schmidt, executive chairman of Google, told CNBC on Tuesday.

Source: amazon.com

Co-author of the recently released "The New Digital Age," Schmidt explored the promise and the pitfalls of a completely connected world.

"The terrorists can get phones, too," he said in a "Squawk Box" interview. "But terrorists will make mistakes, and it'll be possible to track them down."

He cited the Boston Marathon bombing investigation, which yielded quick results by broadcasting and sharing photos of the suspects. Authorities also said the carjacking victim in the violent spree left his cell phone on, which allowed law enforcement to track the vehicle.

(Read More: Tsarnaev Social Posts Should Have Been Flagged: Expert)

Jared Cohen, founder and director of Google Ideas and Schmidt's co-author, told CNBC, "It's going to be difficult for criminals and terrorists to operate off the grid. When individuals involved in criminal activity are using technology, the room for error goes up."

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Globalization and Money

"In the spread of all this globalization, you're [also] going to have much more efficient money flows," Schmidt said. "In every case, they're going to be trackable. ... You can track corruption and the other things that bedevil the third world."

Addressing the emergence of alternative currencies, he called digital money bitcoin a "technological tour de force" but questioned its ultimate legality.

(Read More: What Is Bitcoin?)

In "The New Digital Age," Schmidt and Cohen wrote that "the real challenge will be a combination of virtual currency with anonymous networks that hide the physical location of services."

Source: google.com

Future of Mobile Devices

"The biggest thing that will happen from Google and other companies is that the device you carry, you'll become even more dependent upon," Schmidt predicted. "It can remember things ... and make suggestions that are 'aha moments.' "

He said he hopes that the much-anticipated, wearable Google Glass will be among the devices people use. "[But] most of it will be phones and tablets."

Online Privacy

"Privacy and security is essentially the ultimate shared responsibility between companies, government, and the people who are actually using the tools," Cohen, "The New Digital Age" co-author, said. "More connectivity doesn't remove the importance of human judgment in the future."

(Watch: Hacking America in the CNBC Digital Workshop)

He predicted that parents are going to have to educate their children about online privacy and security perhaps years before having "the talk" about the Birds and Bees.

Rise of the Machines?

"It'll be a long time before the machines take over the world," Schmidt said. "The core problem in society is not that the machines are taking over the world, but rather, automated machines are taking over some low-skilled jobs."

"The answer to that, of course, is education," he added.

By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC

Market Insider with Patti Domm