Because much of the terminology of cryptology dates to a time when written messages were the only things being secured, the source information, even if it is an apparently incomprehensible binary stream of 1s and 0s, as in computer output, is referred to as the plaintext. As noted above, the secret information known only to the legitimate users is the key, and the transformation of the plaintext under the control of the key into a cipher (also called ciphertext) is referred to as encryption. The inverse operation, by which a legitimate receiver recovers the concealed information from the cipher using the key, is known as decryption.

The most frequently confused, and misused, terms in the lexicon of cryptology are code and cipher. Even experts occasionally employ these terms as though they were synonymous.

A code is simply an unvarying rule for replacing a piece of information (e.g., letter, word, or phrase) with another object, but not necessarily of the same sort; Morse code, which replaces alphanumeric characters with patterns of dots and dashes, is a familiar example. Probably the most widely known code in use today is the American Standard Code for Information Interchange (ASCII). Employed in all personal computers and terminals, it represents 128 characters (and operations such as backspace and carriage return) in the form of seven-bit binary numbersi.e., as a string of seven 1s and 0s. In ASCII a lowercase a is always 1100001, an uppercase A always 1000001, and so on. Acronyms are also widely known and used codes, as, for example, Y2K (for Year 2000) and COD (meaning cash on delivery). Occasionally such a code word achieves an independent existence (and meaning) while the original equivalent phrase is forgotten or at least no longer has the precise meaning attributed to the code worde.g., modem (originally standing for modulator-demodulator).

Ciphers, as in the case of codes, also replace a piece of information (an element of the plaintext that may consist of a letter, word, or string of symbols) with another object. The difference is that the replacement is made according to a rule defined by a secret key known only to the transmitter and legitimate receiver in the expectation that an outsider, ignorant of the key, will not be able to invert the replacement to decrypt the cipher. In the past, the blurring of the distinction between codes and ciphers was relatively unimportant. In contemporary communications, however, information is frequently both encoded and encrypted so that it is important to understand the difference. A satellite communications link, for example, may encode information in ASCII characters if it is textual, or pulse-code modulate and digitize it in binary-coded decimal (BCD) form if it is an analog signal such as speech. The resulting coded data is then encrypted into ciphers by using the Data Encryption Standard or the Advanced Encryption Standard (DES or AES; described in the section History of cryptology). Finally, the resulting cipher stream itself is encoded again, using error-correcting codes for transmission from the ground station to the orbiting satellite and thence back to another ground station. These operations are then undone, in reverse order, by the intended receiver to recover the original information.

In the simplest possible example of a true cipher, A wishes to send one of two equally likely messages to B, say, to buy or sell a particular stock. The communication must take place over a wireless telephone on which eavesdroppers may listen in. It is vital to As and Bs interests that others not be privy to the content of their communication. In order to foil any eavesdroppers, A and B agree in advance as to whether A will actually say what he wishes B to do, or the opposite. Because this decision on their part must be unpredictable, they decide by flipping a coin. If heads comes up, A will say Buy when he wants B to buy and Sell when he wants B to sell. If tails comes up, however, he will say Buy when he wants B to sell, and so forth. (The messages communicate only one bit of information and could therefore be 1 and 0, but the example is clearer using Buy and Sell.)

With this encryption/decryption protocol being used, an eavesdropper gains no knowledge about the actual (concealed) instruction A has sent to B as a result of listening to their telephone communication. Such a cryptosystem is defined as perfect. The key in this simple example is the knowledge (shared by A and B) of whether A is saying what he wishes B to do or the opposite. Encryption is the act by A of either saying what he wants done or not as determined by the key, while decryption is the interpretation by B of what A actually meant, not necessarily of what he said.

This example can be extended to illustrate the second basic function of cryptography, providing a means for B to assure himself that an instruction has actually come from A and that it is unalteredi.e., a means of authenticating the message. In the example, if the eavesdropper intercepted As message to B, he couldeven without knowing the prearranged keycause B to act contrary to As intent by passing along to B the opposite of what A sent. Similarly, he could simply impersonate A and tell B to buy or sell without waiting for A to send a message, although he would not know in advance which action B would take as a result. In either event, the eavesdropper would be certain of deceiving B into doing something that A had not requested.

To protect against this sort of deception by outsiders, A and B could use the following encryption/decryption protocol.

They secretly flip a coin twice to choose one of four equally likely keys, labeled HH, HT, TH, and TT, with both of them knowing which key has been chosen. The outcome of the first coin flip determines the encryption rule just as in the previous example. The two coin flips together determine an authentication bit, 0 or 1, to be appended to the ciphers to form four possible messages: Buy-1, Buy-0, Sell-1, and Sell-0. B will only accept a message as authentic if it occurs in the row corresponding to the secret key. The pair of messages not in that row will be rejected by B as non-authentic. B can easily interpret the cipher in an authentic message to recover As instructions using the outcome of the first coin flip as the key. If a third party C impersonates A and sends a message without waiting for A to do so, he will, with probability 1/2, choose a message that does not occur in the row corresponding to the key A and B are using. Hence, the attempted deception will be detected by B, with probability 1/2. If C waits and intercepts a message from A, no matter which message it is, he will be faced with a choice between two equally likely keys that A and B could be using. As in the previous example, the two messages he must choose between convey different instructions to B, but now one of the ciphers has a 1 and the other a 0 appended as the authentication bit, and only one of these will be accepted by B. Consequently, Cs chances of deceiving B into acting contrary to As instructions are still 1/2; namely, eavesdropping on A and Bs conversation has not improved Cs chances of deceiving B.

Clearly, in either example, secrecy or secrecy with authentication, the same key cannot be reused. If C learned the message by eavesdropping and observed Bs response, he could deduce the key and thereafter impersonate A with certainty of success. If, however, A and B chose as many random keys as they had messages to exchange, the security of the information would remain the same for all exchanges. When used in this manner, these examples illustrate the vital concept of a onetime key, which is the basis for the only cryptosystems that can be mathematically proved to be cryptosecure. This may seem like a toy example, but it illustrates the essential features of cryptography. It is worth remarking that the first example shows how even a child can create ciphers, at a cost of making as many flips of a fair coin as he has bits of information to conceal, that cannot be broken by even national cryptologic services with arbitrary computing powerdisabusing the lay notion that the unachieved goal of cryptography is to devise a cipher that cannot be broken.

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