Your hotel example is pretty absurd, because there's no friction involved in carrying around a hotel room key.
There is significant friction involved in memorizing a long password. So no, it's not "how most of the world already works".
There is significant friction involved in memorizing a long password. So no, it's not "how most of the world already works".
I guess a more direct example would be an employer trusting you with the combination of a safe. You would need to remember the combination which presumably would be changed periodically.
The point I think I'm trying to make is that it's rare for a business to leave the responsibility on the consumer to secure the property of that business whether it's access to a server, a hotel room, or a safe.
A better example would be a safe deposit box or storage unit with a combination. Where you are accessing your account so to speak. There you can pick the combination yourself in most cases.