A method and system for authenticating a smart battery having a smart battery and an electronic device. Both the device and the smart battery generate encrypted random strings using key material based by A/D noise bits as a seed value. A pseudo random number is generated from the A/D noise that is transmitted to both the electronic device and the smart battery. The pseudo random number is used by both devices as a key index to select one of a plurality of keys stored in separate key libraries. The keys, or key material, is used to execute an encryption algorithm. The two encryption data streams are then compared to authenticate the smart battery.