Perhaps, for the truly security-obsessed, the solution is to enforce an actual physical separation. Passwords aren't stored on the phone, but on a small bluetooth dongle that you keep in another pocket. When the phone needs a password, it queries the dongle for it, and never stores it locally. Phone continues to be useful to the owner, but now the pickpocket needs to grab a second object at the same time if he wants to make use of the passwords stored on it.
Posted Aug 4, 2011 16:40 UTC (Thu) by raven667 (subscriber, #5198)
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Bluetooth might have two much range, maybe some sort of PAN so you have to be touching the phone. Any of these kind of solutions could have real problems with attackers who are physically near the victim, or whole-sale compromise by installing the right radios in a crowded area or even on a well-used stairwell railing or similar.