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Recently I had the chance to test out a clever little device called the hiddn Crypto Adapter. Made by Norway-based High Density Devices, the adapter looks somewhat like a miniature desk calculator with a USB port instead of a display, but its simple appearance belies some powerful functionality: transparent, real-time encryption of USB drives with two-factor authentication.

The adapter essentially acts as a proxy between your computer and a USB drive, meaning it needs no software, has no operating system requirement, and works with everything from a flash memory stick to an external hard drive. All communication with the USB device is encrypted on the fly using 256-bit AES via a certified FIPS 140-2 Level 3 crypto module, but the key isn’t stored on the drive: at the front of the hiddn adapter is a smart card slot.

When you insert a smart card, you have to enter the corresponding PIN code to use it. (After three unsuccessful attempts, the card becomes locked until a longer PUK code is given.) The device does not appear as an active USB device in the OS until a card is verified, and becomes “unplugged” when the card is removed. The encryption key (or half of it in split-key mode) stays on the smart card, making an encrypted drive unusable without it.

Setting up and operating the hiddn system is very straightforward. You connect it to your computer with a USB cable, plug a drive into the top USB port, insert your smart card, and then enter your PIN. From there, the experience is no different than using a USB drive normally – there’s not even a difference in speed.

When I first connected an unencrypted drive on a Windows machine, it appeared as an unformatted drive. After formatting, it behaved just as it would when plugged in directly. (A few times I had to reconnect the adapter to get Windows to recognize a new drive if I didn’t “eject” the drive first or tried a bad PIN, but those were minor issues.) Trying to use the drive without the hiddn adapter after it had been encrypted brought up another prompt to format – Windows could tell there was a volume, but it was completely unreadable.

After using the hiddn Crypto Adapter for a short time, I started wondering why no one else had thought of it before – or at least why I’d never heard of it before. It’s a great tool for anyone wanting a no-hassle method to encrypt removable storage. The only potential drawback is pricing; two adapters and two sets of pre-configured smart cards can run almost $900. High Density Devices offers a few different packages of units and cards, ranging from one of each to ten, as well as an enterprise key management system for creating new cards. But while some users may find hiddn too expensive for personal use, its flexibility, ease-of-use, and high security make for a combination that’s hard to beat.