I wonder why we still have passwords. Couldn't we have a simple USB device that is encrypted, cooperates with the native O/S in an encrypted manner, and then al

I wonder why we still have passwords. Couldn't we have a simple USB device that is encrypted, cooperates with the native O/S in an encrypted manner, and then allows remote login to sites also in an encrypted manner? The device could be programmed to automatically generate new passwords/keys/whatever needed for remote authentication. It would also have a 'disable' functionality that would render it useless if stolen. (Perhaps this thing already exists. I am too lazy to google it as I type this :-)).