Portable electronic storage devices with hardware based security are described. According to one exemplary embodiment of the present invention, a portable electronic storage device (PESD) comprises a security engine integrated thereon. The security engine is configured to provide data encryption, data decryption, and encryption/decryption key (referred to as a key) generation according to a security standard (e.g., Advance Encryption Standard (AES)). AES is a symmetric encryption algorithm processing data in block of 128 bits. Under the influence of a key, a 128-bit data block is encrypted by transforming the data block in a unique way into a new data block of the same size. AES is symmetric sine the same key is used for encryption and the reverse transformation (i.e., decryption). The only secret necessary to keep for security is the key. AES may use different key-lengths (i.e., 128-bit, 192-bits and 256-bits).