In the last few decades, patients demand the data integrity and confidentiality of their Electrocardiography (ECG) signal for remote diagnosis through the network. In this context, a Dynamic Hash key‐based stream cipher for a cryptosystem is proposed to transmit the ECG signal to maintain integrity and confidentiality. The novelty of this proposed methodology is based on real‐time dynamic non‐recursive pseudorandom keystream using dynamic Toeplitz hash value‐based RC4 algorithm, unlike the existing static key‐based stream ciphers. The Toeplitz hash value (HV) is constructed from the sequence generated using non‐singular sequence folding‐based nonlinear feedback function expressed in algebraic normal form. The proposed design is realized using Verilog hardware description language (HDL) to construct the non‐recursive dynamic key stream sequence and prototyped on existing hardware Field‐programmable gate array (FPGA) device Virtex 5 xc5vlx110t‐2ff1136. The generated dynamic binary key stream sequence is analysed for key size, correlation and further verified by randomness tests using National Institute of Standards and Technology statistical test suites. The laboratory experiment is carried out with the existing two FPGA boards to prototype the proposed hardware cryptosystem for the encryption and decryption of real time ECG signal. The implementation result in the FPGA device accomplishes with the initial latency of 257 clock cycles and improved data throughput of 534Mbps than the existing design. Copyright © 2016 John Wiley & Sons, Ltd.