And it blows away SE’s.
See here: http://us.blizzard.com/support/article.xml?articleId=24660&rhtml=true
It is a small token you carry with a number that changes every 60 seconds. It has a code which is required to log-on.
Since the number is not predictable, and it changes every 60 seconds, a keylogger is useless (unless the data is transmitted, then used very quickly). Even if you get key logged, the number is not valid long enough to be useful. And this too can be prevented by simply not allowing a number to be used twice (common with the RSA keychain device).
For a 1-time fee to ensure your account is safe and cannot be hijacked, I say its a fantastic idea. SE should take note and then implement something like this. I would pay the $6.50 in a second for one.
edit: I read this wrong (Lurn 2 reed) — the number doesn’t change every 60 seconds, it just generates a new number when you press a button on the device. And each number is only good once (very good!). Still, unless the next number becomes predictable, it adds a new layer of security. On the surface, this looks more like the keychains that unlock your car. Every time you hit a button on your keychain, it sends a command with a unique encryption key which is never used again. The car has already figured out what the next 50-100 keys will be, and expects one of them. The reason it guesses more is because people will press the button looking for the car or a button gets pressed in your pocket. The car only needs to see one of the 50-100 (maybe more now) to keep the keychain authenticated.
For those who don’t know, there are 3 forms of identification. The more you have, the more secure (in theory) something is. They are, something you know (a password), something you have (a token like this), and something you are (fingerprint/iris scanner). The theory is, that even if you have your password stolen, it is useless without the token. And if you just lose the token, the account is useless without the password too.