I like this idea, and even better if you could make the micro do it all over USB and then also be about the size of a credit card with a USB plug that would be ideal.
I'd love to help with this, but wouldn't know where to start when it comes with an open source idea like this... I'd need more help on the organizing side than the actual "doing side"....
To get started with the open source option, you'd want to set up an online repo. I've done some basic development on github.com, which offers free source hosting for open source projects. Sourceforge is another option. I like github as it integrates with git very nicely. I don't *believe* that there are language restrictions for github projects, so an arduino project should be fine.
After that, I think this comes down to acquiring an arduino and determining what add-ons will be needed. Starter ideas:
-usb interface
-some sort of keyboard/keypad? a usb port to accept a keyboard?
-an adequate display, maybe
The remainder is developing the basic functionality
-generating a public/private key on an arduino
-generating a transaction hash (i.e. signing a transaction)
I can help with reading, research and documentation. Eventually I can help with testing and development, but as I'm unemployed I'd like to limit my spending to what's necessary to live. If only I could eat arduinos

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