In theory.

not sure what you read... or even what kind of programming you've ever done on real world authentication/cryptography or even if you've ever managed a simple exclusive or routine...

But i have no need to read up (or for that matter anyone) on any of what you suggested, i was talking more of how to make arduino act as a slave device to allow communication to and from the pc to be encrypted on a very simple level... so don't get over yourself.