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Why can't this be used to replace all of the java applets or allow java back into the browser? I know there were security issues before with native Java, perhaps JS sandboxed Java could solve the security issues.

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Java applets are more powerful than any web browser API (you can't get at USB devices from the web browser except through a plugin, for example). BankID (used for banking and electronic payment in the Nordic countries by almost every bank) makes use of this to do validation with a USB device to authenticate based on bank card.

>you can't get at USB devices from the web browser except through a plugin, for example

Not yet, we can't. Mozilla is working on the WebUSB[0] API that'll allow access to USB devices via javascript as part of their ongoing WebAPI effort. They need this for FirefoxOS at some point, and these APIs are being implemented in desktop Firefox as well.

[0] https://wiki.mozilla.org/WebAPI/WebUSB

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