I really like your idea on the public/private key communication. Only problem is that Im really quite new to arduino coding.
New to Arduino coding (ie, C/C++) - or coding in general?
is there some native arduino command that will encrypt and decrypt the incoming/outgoing data?
Nothing "native" that I know of - but there are AVR and Arduino libraries for various encryption methods floating around out there; you might be able to find something already pre-written (of course, you would need something similar on the PC side as well).