I have a suggestion.
Part of why mag-stripe cards find more use than smart cards is because they are cheap and ubiquitous. Every merchant on the planet has some device already which scans mag-stripe cards and if they somehow don't (or use an embedded device) they can be had for less than $20.
When base-64 encoded, the public and private keys for a single wallet are plenty small enough to fit on the two tracks readable by most devices. Simply use a block cipher of some sort and a standard PIN number to secure the private key before burning to a card, write a little software to b64decode the keys and you're good to go. More merchants will accept a mag-stripe solution than a smartcard solution because it either uses hardware they already own OR it requires less expensive hardware.
You may also consider hacking together a small embedded device that handles all of this for the merchant and just needs a network connection. Once bitcoin gets ported to Android successfully you could easily write software for a smallish tablet like the Archos 7, which has a USB host adapter cable that allows keyboards and other HID compliant devices (like mag-stripe readers) to be attached. It's also fairly cheap in the $130-$150 range.
Merchants like easy, merchants like familiar, and merchants definitely like cheap. Give them something with a < $200 buy-in cost that will bring them niche business from the bitcoin folks that won't cost them monthly fees or steal a percentage of their profits and they will come in swarms. Make it convert to USD and deposit in Dwolla or such automatically and it'll be an even easier sell.
Part of why mag-stripe cards find more use than smart cards is because they are cheap and ubiquitous. Every merchant on the planet has some device already which scans mag-stripe cards and if they somehow don't (or use an embedded device) they can be had for less than $20.
When base-64 encoded, the public and private keys for a single wallet are plenty small enough to fit on the two tracks readable by most devices. Simply use a block cipher of some sort and a standard PIN number to secure the private key before burning to a card, write a little software to b64decode the keys and you're good to go. More merchants will accept a mag-stripe solution than a smartcard solution because it either uses hardware they already own OR it requires less expensive hardware.
You may also consider hacking together a small embedded device that handles all of this for the merchant and just needs a network connection. Once bitcoin gets ported to Android successfully you could easily write software for a smallish tablet like the Archos 7, which has a USB host adapter cable that allows keyboards and other HID compliant devices (like mag-stripe readers) to be attached. It's also fairly cheap in the $130-$150 range.
Merchants like easy, merchants like familiar, and merchants definitely like cheap. Give them something with a < $200 buy-in cost that will bring them niche business from the bitcoin folks that won't cost them monthly fees or steal a percentage of their profits and they will come in swarms. Make it convert to USD and deposit in Dwolla or such automatically and it'll be an even easier sell.
The problem with this approach is that every merchant "has" to steal your private key for it to work, even a honest host could screw up and keep a copy or if they infected they could be doing it for the bad guy without knowing it.
It's very possible build a secure variant wih cards being around 10 usd each if in reasonable volume with pos solutions ranging from 20 to 200 or so. Just have to design around commodity hw just not mag cards
