Scorched_Cascade said:
At the risk of being ridiculed for my lack of current computer cracking knowledge. Couldn't the account be hacked by breaking into the computer and imposing your computer between the victim and their steam account?
The way this system works is that the system hardware has a unique key built into it when it's manufactured, and each application would also have a unique key. There is an encryption algorithm built into the hardware that generates rotating security codes based on the application key and the hardware key, which change every few seconds. Whenever you try to authenticate, you'll send Valve your username/password like normal, and you'll also send them a generated security code from the hardware on your machine. Valve will then try to validate the security code based on Intel's encoding system and the hardware key that they have stored on their server as the one you authorized on your account. If they don't match, you can't log in, even with the correct username and password.
It's very similar to the kind of one-time password fobs that banks have started to offer, or the Blizzard Authenticator. The main difference is that the hardware is built into your computer, and that hardware can support many different applications, instead of just one. The plan, at least in Intel's eyes, is to get the same level of support with banking websites, major online stores, and all the other things where being able to verify someone's identity is important enough that a simple username/password just doesn't cut it. Then you can lock down all of these services to just the computer (or few computers) that you typically use, and it prevents anyone else from stealing your accounts even if they do get your username/password.
In theory, you can bypass this kind of system with software on the local machine, but it would have to have complete control of the entire system, and even then it's not guaranteed - for example, if it operates like HDCP, the data will be encrypted at every level of the system. Of course, if that kind of software was on your machine, you're in a lot of trouble no matter what and at least this system offers some potential for protection even in that extreme case, while you'd be screwed without it.