The proliferation of the digitized media introduces an exigent problem of security in multimedia data transmission in the network surroundings. Consequently, digital watermark technique needs to be incorporated in a digital rights management framework to address different aspects of the content management. The objective is to develop low power, real time, reliable and secure data hiding system that can be achieved all the way through hardware implementation. As an attempt towards the power efficient system, here we present an oblivious, spatial domain watermarking based authentication algorithm and its VLSI/ULSI architecture. It is realized with the help of Single electron tunnelling (SET) devices where classical binary bit '1' and '0' are encoded. The advantage of the SET devices is that it requires much less power than conventional technologies. The proposed scheme employs the lower bit plane modulation for hiding a binary image like information within a gray scale image. All the modules of the watermarking algorithm are implemented in SET device based Logic along with its computer simulation. It is shown that the low cost data embedding algorithm can conceal watermark into original cover image coming from a sensor much faster than software implementation and the embedded image is easily transmitted to PC by using proper interface. The quality of the transmitted image is also comparable to that of the implemented by software algorithm. © 2008 IEEE.