> The device has to know it, in plaintext, in order to actually do anything

How so? You can use pins for encryption, I believe that's what tptacek was referring to.

If you use a strong key derivation function with an efficient hardware (i.e. within a few orders of efficiency limits of current generation), while using maybe 10J of energy, will economically protect at least about $1000, or $16000 with an 8 character pin. In practice significantly more because of hardware costs for a parallel attack, and the casual cracker wouldn't be willing to spend that much on a totally uncertain reward. At moderate hardware costs it could take years to crack.