Key files on a pendrive isnt the same as a smart card where the authentication is done in hardware and is uncopyable. This really does seem like a much better system than passwords which are subject to all kinds of human errors. Probably the best thing about this new system is that it is based around the Open Standard .NET architecture.

i LIEk tEH rEDhAt. nOW i NEeD sOMe rEdsHOeS.