Crypto-Gram Newsletter

July 15, 2009

by Bruce Schneier
Chief Security Technology Officer, BT
schneier@schneier.com
http://www.schneier.com

A free monthly newsletter providing summaries, analyses, insights, and commentaries on security: computer and otherwise.

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You can read this issue on the web at <http://www.schneier.com/crypto-gram-0907.html>. These same essays appear in the "Schneier on Security" blog: <http://www.schneier.com/blog>. An RSS feed is available.


In this issue:


Imagining Threats

A couple of years ago, the Department of Homeland Security hired a bunch of science fiction writers to come in for a day and think of ways terrorists could attack America. If our inability to prevent 9/11 marked a failure of imagination, as some said at the time, then who better than science fiction writers to inject a little imagination into counterterrorism planning?

I discounted the exercise at the time, calling it "embarrassing." I never thought that 9/11 was a failure of imagination. I thought, and still think, that 9/11 was primarily a confluence of three things: the dual failure of centralized coordination and local control within the FBI, and some lucky breaks on the part of the attackers. More imagination leads to more movie-plot threats -- which contributes to overall fear and overestimation of the risks. And that doesn't help keep us safe at all.

Recently, I read a paper by Magne Jorgensen that provides some insight into why this is so. Titled More Risk Analysis Can Lead to Increased Over-Optimism and Over-Confidence, the paper isn't about terrorism at all. It's about software projects.

Most software development project plans are overly optimistic, and most planners are overconfident about their overoptimistic plans. Jorgensen studied how risk analysis affected this. He conducted four separate experiments on software engineers, and concluded (though there are lots of caveats in the paper, and more research needs to be done) that performing more risk analysis can make engineers more overoptimistic instead of more realistic.

Potential explanations all come from behavioral economics: cognitive biases that affect how we think and make decisions. (I've written about some of these biases and how they affect security decisions, and there's a great book on the topic as well.)

First, there's a control bias. We tend to underestimate risks in situations where we are in control, and overestimate risks in situations when we are not in control. Driving versus flying is a common example. This bias becomes stronger with familiarity, involvement and a desire to experience control, all of which increase with increased risk analysis. So the more risk analysis, the greater the control bias, and the greater the underestimation of risk.

The second explanation is the availability heuristic. Basically, we judge the importance or likelihood of something happening by the ease of bringing instances of that thing to mind. So we tend to overestimate the probability of a rare risk that is seen in a news headline, because it is so easy to imagine. Likewise, we underestimate the probability of things occurring that don't happen to be in the news.

A corollary of this phenomenon is that, if we're asked to think about a series of things, we overestimate the probability of the last thing thought about because it's more easily remembered.

According to Jorgensen's reasoning, people tend to do software risk analysis by thinking of the severe risks first, and then the more manageable risks. So the more risk analysis that's done, the less severe the last risk imagined, and thus the greater the underestimation of the total risk.

The third explanation is similar: the peak end rule. When thinking about a total experience, people tend to place too much weight on the last part of the experience. In one experiment, people had to hold their hands under cold water for one minute. Then, they had to hold their hands under cold water for one minute again, then keep their hands in the water for an additional 30 seconds while the temperature was gradually raised. When asked about it afterwards, most people preferred the second option to the first, even though the second had more total discomfort. (An intrusive medical device was redesigned along these lines, resulting in a longer period of discomfort but a relatively comfortable final few seconds. People liked it a lot better.) This means, like the second explanation, that the least severe last risk imagined gets greater weight than it deserves.

Fascinating stuff. But the biases produce the reverse effect when it comes to movie-plot threats. The more you think about far-fetched terrorism possibilities, the more outlandish and scary they become, and the less control you think you have. This causes us to overestimate the risks.

Think about this in the context of terrorism. If you're asked to come up with threats, you'll think of the significant ones first. If you're pushed to find more, if you hire science-fiction writers to dream them up, you'll quickly get into the low-probability movie plot threats. But since they're the last ones generated, they're more available. (They're also more vivid -- science fiction writers are good at that -- which also leads us to overestimate their probability.) They also suggest we're even less in control of the situation than we believed. Spending too much time imagining disaster scenarios leads people to overestimate the risks of disaster.

I'm sure there's also an anchoring effect in operation. This is another cognitive bias, where people's numerical estimates of things are affected by numbers they've most recently thought about, even random ones. People who are given a list of three risks will think the total number of risks are lower than people who are given a list of 12 risks. So if the science fiction writers come up with 137 risks, people will believe that the number of risks is higher than they otherwise would -- even if they recognize the 137 number is absurd.

Jorgensen does not believe risk analysis is useless in software projects, and I don't believe scenario brainstorming is useless in counterterrorism. Both can lead to new insights and, as a result, a more intelligent analysis of both specific risks and general risk. But an over-reliance on either can be detrimental.

Last month, at the 2009 Homeland Security Science & Technology Stakeholders Conference in Washington D.C., science fiction writers helped the attendees think differently about security. This seems like a far better use of their talents than imagining some of the zillions of ways terrorists can attack America.

This essay originally appeared on Wired.com.
http://www.wired.com/politics/security/commentary/...
A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/06/...


Security, Group Size, and the Human Brain

If the size of your company grows past 150 people, it's time to get name badges. It's not that larger groups are somehow less secure, it's just that 150 is the cognitive limit to the number of people a human brain can maintain a coherent social relationship with.

Primatologist Robin Dunbar derived this number by comparing neocortex -- the "thinking" part of the mammalian brain -- volume with the size of primate social groups. By analyzing data from 38 primate genera and extrapolating to the human neocortex size, he predicted a human "mean group size" of roughly 150.

This number appears regularly in human society; it's the estimated size of a Neolithic farming village, the size at which Hittite settlements split, and the basic unit in professional armies from Roman times to the present day. Larger group sizes aren't as stable because their members don't know each other well enough. Instead of thinking of the members as people, we think of them as groups of people. For such groups to function well, they need externally imposed structure, such as name badges.

Of course, badges aren't the only way to determine in-group/out-group status. Other markers include insignia, uniforms, and secret handshakes. They have different security properties and some make more sense than others at different levels of technology, but once a group reaches 150 people, it has to do something.

More generally, there are several layers of natural human group size that increase with a ratio of approximately three: 5, 15, 50, 150, 500, and 1500 -- although, really, the numbers aren't as precise as all that, and groups that are less focused on survival tend to be smaller. The layers relate to both the intensity and intimacy of relationship and the frequency of contact.

The smallest, three to five, is a "clique": the number of people from whom you would seek help in times of severe emotional distress. The twelve to 20 group is the "sympathy group": people with which you have special ties. After that, 30 to 50 is the typical size of hunter-gatherer overnight camps, generally drawn from the same pool of 150 people. No matter what size company you work for, there are only about 150 people you consider to be "co-workers." (In small companies, Alice and Bob handle accounting. In larger companies, it's the accounting department -- and maybe you know someone there personally.) The 500-person group is the "megaband," and the 1,500-person group is the "tribe." Fifteen hundred is roughly the number of faces we can put names to, and the typical size of a hunter-gatherer society.

These numbers are reflected in military organization throughout history: squads of 10 to 15 organized into platoons of three to four squads, organized into companies of three to four platoons, organized into battalions of three to four companies, organized into regiments of three to four battalions, organized into divisions of two to three regiments, and organized into corps of two to three divisions.

Coherence can become a real problem once organizations get above about 150 in size. So as group sizes grow across these boundaries, they have more externally imposed infrastructure -- and more formalized security systems. In intimate groups, pretty much all security is ad hoc. Companies smaller than 150 don't bother with name badges; companies greater than 500 hire a guard to sit in the lobby and check badges. The military have had centuries of experience with this under rather trying circumstances, but even there the real commitment and bonding invariably occurs at the company level. Above that you need to have rank imposed by discipline.

The whole brain-size comparison might be bunk, and a lot of evolutionary psychologists disagree with it. But certainly security systems become more formalized as groups grow larger and their members less known to each other. When do more formal dispute resolution systems arise: town elders, magistrates, judges? At what size boundary are formal authentication schemes required? Small companies can get by without the internal forms, memos, and procedures that large companies require; when does what tend to appear? How does punishment formalize as group size increase? And how do all these things affect group coherence? People act differently on social networking sites like Facebook when their list of "friends" grows larger and less intimate. Local merchants sometimes let known regulars run up tabs. I lend books to friends with much less formality than a public library. What examples have you seen?

An edited version of this essay, without links, appeared in the July/August 2009 issue of IEEE Security & Privacy.

A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/07/...


North Korean Cyberattacks

To hear the media tell it, the United States suffered a major cyberattack last week. Stories were everywhere. "Cyber Blitz hits U.S., Korea" was the headline in Thursday's Wall Street Journal. North Korea was blamed.

Where were you when North Korea attacked America? Did you feel the fury of North Korea's armies? Were you fearful for your country? Or did your resolve strengthen, knowing that we would defend our homeland bravely and valiantly?

My guess is that you didn't even notice, that -- if you didn't open a newspaper or read a news website -- you had no idea anything was happening. Sure, a few government websites were knocked out, but that's not alarming or even uncommon. Other government websites were attacked but defended themselves, the sort of thing that happens all the time. If this is what an international cyberattack looks like, it hardly seems worth worrying about at all.

Politically motivated cyber attacks are nothing new. We've seen UK vs. Ireland. Israel vs. the Arab states. Russia vs. several former Soviet Republics. India vs. Pakistan, especially after the nuclear bomb tests in 1998. China vs. the United States, especially in 2001 when a U.S. spy plane collided with a Chinese fighter jet. And so on and so on.

The big one happened in 2007, when the government of Estonia was attacked in cyberspace following a diplomatic incident with Russia about the relocation of a Soviet World War II memorial. The networks of many Estonian organizations, including the Estonian parliament, banks, ministries, newspapers and broadcasters, were attacked and -- in many cases -- shut down. Estonia was quick to blame Russia, which was equally quick to deny any involvement.

It was hyped as the first cyberwar, but after two years there is still no evidence that the Russian government was involved. Though Russian hackers were indisputably the major instigators of the attack, the only individuals positively identified have been young ethnic Russians living inside Estonia, who were angry over the statue incident.

Poke at any of these international incidents, and what you find are kids playing politics. Last Wednesday, South Korea's National Intelligence Service admitted that it didn't actually know that North Korea was behind the attacks: "North Korea or North Korean sympathizers in the South" was what it said. Once again, it'll be kids playing politics.

This isn't to say that cyberattacks by governments aren't an issue, or that cyberwar is something to be ignored. The constant attacks by Chinese nationals against U.S. networks may not be government-sponsored, but it's pretty clear that they're tacitly government-approved. Criminals, from lone hackers to organized crime syndicates, attack networks all the time. And war expands to fill every possible theater: land, sea, air, space, and now cyberspace. But cyberterrorism is nothing more than a media invention designed to scare people. And for there to be a cyberwar, there first needs to be a war.

Israel is currently considering attacking Iran in cyberspace, for example. If it tries, it'll discover that attacking computer networks is an inconvenience to the nuclear facilities it's targeting, but doesn't begin to substitute for bombing them.

In May, President Obama gave a major speech on cybersecurity. He was right when he said that cybersecurity is a national security issue, and that the government needs to step up and do more to prevent cyberattacks. But he couldn't resist hyping the threat with scare stories: "In one of the most serious cyber incidents to date against our military networks, several thousand computers were infected last year by malicious software -- malware," he said. What he didn't add was that those infections occurred because the Air Force couldn't be bothered to keep its patches up to date.

This is the face of cyberwar: easily preventable attacks that, even when they succeed, only a few people notice. Even this current incident is turning out to be a sloppily modified five-year-old worm that no modern network should still be vulnerable to.

Securing our networks doesn't require some secret advanced NSA technology. It's the boring network security administration stuff we already know how to do: keep your patches up to date, install good anti-malware software, correctly configure your firewalls and intrusion-detection systems, monitor your networks. And while some government and corporate networks do a pretty good job at this, others fail again and again.

Enough of the hype and the bluster. The news isn't the attacks, but that some networks had security lousy enough to be vulnerable to them.

This essay originally appeared on the Minnesota Public Radio website.
http://minnesota.publicradio.org/display/web/2009/...

A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/07/...


Why People Don't Understand Risks

Last week's Minneapolis Star Tribune had the front-page headline: "Co-sleeping kills about 20 infants each year." The only problem is that there's no additional information with which to make sense of the statistic.

How many infants don't die each year? How many infants die each year in separate beds? Is the death rate for co-sleepers greater or less than the death rate for separate-bed sleepers? Without this information, it's impossible to know whether this statistic is good or bad.

But the media rarely provides context for the data. The story is in the aftermath of an incident where a baby was accidentally smothered in his sleep.

Oh, and that 20-infants-per-year number is for Minnesota only. No word as to whether the situation is better or worse in other states.

The headline in the web article is different.
http://www.startribune.com/local/49985722.html?...


Fraud on eBay

I expected selling my computer on eBay to be easy.

Attempt 1: I listed it. Within hours, someone bought it -- from a hacked account, as eBay notified me, canceling the sale.

Attempt 2: I listed it again. Within hours, someone bought it, and asked me to send it to her via FedEx overnight. The buyer sent payment via PayPal immediately, and then -- near as I could tell -- immediately opened a dispute with PayPal so that the funds were put on hold. And then she sent me an e-mail saying "I paid you, now send me the computer." But PayPal was faster than she expected, I think. At the same time, I received an e-mail from PayPal saying that I might have received a payment that the account holder did not authorize, and that I shouldn't ship the item until the investigation is complete.

I was willing to make Attempt 3, but someone on my blog bought it first. It looks like eBay is completely broken for items like this.

It's not just me.
http://consumerist.com/5007790/...
A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/06/...


News

Did a public Twitter post lead to a burglary?
http://www.usatoday.com/travel/news/...

Prairie dogs hack Baltimore Zoo; an amusing story that echoes a lot of our own security problems.
http://www.baltimoresun.com/news/maryland/...
The U.S. Department of Homeland Security has a blog. I don't know if it will be as interesting or entertaining as the TSA's blog.
http://www.dhs.gov/journal/theblog

Carrot-bomb art project bombs in Sweden:
http://news.bbc.co.uk/2/hi/europe/8099561.stm

Fascinating research on the psychology of con games. "The psychology of scams: Provoking and committing errors of judgement" was prepared for the UK Office of Fair Trading by the University of Exeter School of Psychology.
http://www.schneier.com/blog/archives/2009/06/...

New computer snooping tool: http://investors.guidancesoftware.com/...
This week's movie-plot threat -- fungus:
http://www.schneier.com/blog/archives/2009/06/...

Engineers are more likely to become Muslim terrorists. At least, that's what the facts indicate. Is it time to start profiling?
http://www.newscientist.com/article/...
http://www.nuff.ox.ac.uk/users/gambetta/...

John Mueller on nuclear disarmament: "The notion that the world should rid itself of nuclear weapons has been around for over six decades -- during which time they have been just about the only instrument of destruction that hasn't killed anybody."
http://www.schneier.com/blog/archives/2009/06/...

Eavesdropping on dot-matrix printers by listening to them.
http://www.schneier.com/blog/archives/2009/06/...

Research on the security of online games:
http://www.schneier.com/blog/archives/2009/06/...

Ross Anderson liveblogged the 8th Workshop on Economics of Information Security (WEIS) at University College London.
http://www.lightbluetouchpaper.org/2009/06/24/...
I wrote about WEIS 2006 back in 2006.
http://www.schneier.com/blog/archives/2006/06/...

Clear, the company that sped people through airport security, has ceased operations. It is unclear what will happen to all that personal data they have collected.
http://www.schneier.com/blog/archives/2009/06/...

This no-stabbing knife seems not to be a joke.
http://www.timesonline.co.uk/tol/news/uk/crime/...
I've already written about the risks of pointy knives.
http://www.schneier.com/blog/archives/2005/06/...

The Communication Security Establishment (CSE, basically Canada's NSA) is growing so fast they're running out of room and building new office buildings.
http://www.defenseindustrydaily.com/...
Cryptography spam:
http://www.schneier.com/blog/archives/2009/06/...

More security countermeasures from the natural world:
1. The plant caladium steudneriifolium pretends to be ill so mining moths won't eat it.
http://news.bbc.co.uk/earth/hi/earth_news/...
2. Cabbage aphids arm themselves with chemical bombs.
http://scienceblogs.com/notrocketscience/2009/06/...
3. The dark-footed ant spider mimics an ant so that it's not eaten by other spiders, and so it can eat spiders itself.
http://scienceblogs.com/notrocketscience/2009/06/...
http://scienceblogs.com/notrocketscience/2009/07/...
Information leakage from keypads. (You need to click on the link to see the pictures.)
http://www.schneier.com/blog/archives/2009/07/...

Good essay -- "The Staggering Cost of Playing it 'Safe'" -- about the political motivations for terrorist security policy.
http://www.dailykos.com/storyonly/2009/6/16/743102/...
My commentary on a article hyping the terrorist risk of cloud computing:
http://www.schneier.com/blog/archives/2009/07/...

Pocketless trousers to protect against bribery in Nepal:
http://www.google.com/hostednews/afp/article/...
Anti-theft lunch bags:
http://design-milk.com/anti-theft-lunch-bags/

U.S. court institutes limits on TSA searches. This is good news.
http://www.schneier.com/blog/archives/2009/07/...

Spanish police foil remote-controlled zeppelin jailbreak. Sometimes movie plots actually happen.
http://gizmodo.com/5307943/...
http://www.thestar.com/news/world/article/660875

Almost two years ago, I wrote about my strategy for encrypting my laptop. One of the things I said was: "There are still two scenarios you aren't secure against, though. You're not secure against someone snatching your laptop out of your hands as you're typing away at the local coffee shop. And you're not secure against the authorities telling you to decrypt your data for them." Here's a free program that defends against that first threat: it locks the computer unless a key is pressed every n seconds. Honestly, this would be too annoying for me to use, but you're welcome to try it.
http://www.donationcoder.com/Forums/bb/index.php?...
http://www.schneier.com/blog/archives/2009/06/...
http://www.schneier.com/essay-199.html

You won't hear about this ATM vulnerability, because the presentation has been pulled from the BlackHat conference:
http://www.schneier.com/blog/archives/2009/07/...

The NSA is building a massive data center in Utah.
http://www.sltrib.com/ci_12735293
http://www.deseretnews.com/article/705314456/...
I was quoted as calling Google's Chrome operating system "idiotic." Here's additional explanation and context.
http://www.schneier.com/blog/archives/2009/07/...

How to cause chaos in an airport: leave a suitcase in a restroom.
http://www.schneier.com/blog/archives/2009/07/...

Interesting paper from HotSec '07: "Do Strong Web Passwords Accomplish Anything?" by Dinei Florencio, Cormac Herley, and Baris Coskun.
http://www.usenix.org/event/hotsec07/tech/...
Interesting use of gaze tracking software to protect privacy:
http://www.schneier.com/blog/archives/2009/07/...

Poor man's steganography -- hiding documents in corrupt PDF documents:
http://blog.didierstevens.com/2009/07/01/...


Authenticating Paperwork

It's a sad, horrific story. Homeowner returns to find his house demolished. The demolition company was hired legitimately but there was a mistake and it demolished the wrong house. The demolition company relied on GPS co-ordinates, but requiring street addresses isn't a solution. A typo in the address is just as likely, and it would have demolished the house just as quickly.

The problem is less how the demolishers knew which house to knock down, and more how they confirmed that knowledge. They trusted the paperwork, and the paperwork was wrong. Informality works when everybody knows everybody else. When merchants and customers know each other, government officials and citizens know each other, and people know their neighbors, people know what's going on. In that sort of milieu, if something goes wrong, people notice.

In our modern anonymous world, paperwork is how things get done. Traditionally, signatures, forms, and watermarks all made paperwork official. Forgeries were possible but difficult. Today, there's still paperwork, but for the most part it only exists until the information makes its way into a computer database. Meanwhile, modern technology -- computers, fax machines and desktop publishing software -- has made it easy to forge paperwork. Every case of identity theft has, at its core, a paperwork failure. Fake work orders, purchase orders, and other documents are used to steal computers, equipment, and stock. Occasionally, fake faxes result in people being sprung from prison. Fake boarding passes can get you through airport security. This month hackers officially changed the name of a Swedish man.

A reporter even changed the ownership of the Empire State Building. Sure, it was a stunt, but this is a growing form of crime. Someone pretends to be you -- preferably when you're away on holiday -- and sells your home to someone else, forging your name on the paperwork. You return to find someone else living in your house, someone who thinks he legitimately bought it. In some senses, this isn't new. Paperwork mistakes and fraud have happened ever since there was paperwork. And the problem hasn't been fixed yet for several reasons.

One, our sloppy systems generally work fine, and it's how we get things done with minimum hassle. Most people's houses don't get demolished and most people's names don't get maliciously changed. As common as identity theft is, it doesn't happen to most of us. These stories are news because they are so rare. And in many cases, it's cheaper to pay for the occasional blunder than ensure it never happens.

Two, sometimes the incentives aren't in place for paperwork to be properly authenticated. The people who demolished that family home were just trying to get a job done. The same is true for government officials processing title and name changes. Banks get paid when money is transferred from one account to another, not when they find a paperwork problem. We're all irritated by forms stamped 17 times, and other mysterious bureaucratic processes, but these are actually designed to detect problems.

And three, there's a psychological mismatch: it is easy to fake paperwork, yet for the most part we act as if it has magical properties of authenticity.

What's changed is scale. Fraud can be perpetrated against hundreds of thousands, automatically. Mistakes can affect that many people, too. What we need are laws that penalize people or companies -- criminally or civilly -- who make paperwork errors. This raises the cost of mistakes, making authenticating paperwork more attractive, which changes the incentives of those on the receiving end of the paperwork. And that will cause the market to devise technologies to verify the provenance, accuracy, and integrity of information: telephone verification, addresses and GPS co-ordinates, cryptographic authentication, systems that double- and triple-check, and so on.

We can't reduce society's reliance on paperwork, and we can't eliminate errors based on it. But we can put economic incentives in place for people and companies to authenticate paperwork more.

This essay originally appeared in The Guardian.
http://www.guardian.co.uk/technology/2009/jun/24/...
A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/06/...


The Pros and Cons of Password Masking

Usability guru Jakob Nielsen opened up a can of worms when he made the case against password masking -- the practice of hiding computer password characters behind asterisks -- in his blog. I chimed in that I agreed. Almost 165 comments on my blog (and several articles, essays, and many other blog posts) later, the consensus is that we were wrong.

I was certainly too glib. Like any security countermeasure, password masking has value. But like any countermeasure, password masking is not a panacea. And the costs of password masking need to be balanced with the benefits.

The cost is accuracy. When users don't get visual feedback from what they're typing, they're more prone to make mistakes. This is especially true with character strings that have non-standard characters and capitalization. This has several ancillary costs:

* Users get pissed off.

* Users are more likely to choose easy-to-type passwords, reducing both mistakes and security. Removing password masking will make people more comfortable with complicated passwords: they'll become easier to memorize and easier to use.

The benefits of password masking are more obvious:

*Security from shoulder surfing. If people can't look over your shoulder and see what you're typing, they're much less likely to be able to steal your password. Yes, they can look at your fingers instead, but that's much harder than looking at the screen. Surveillance cameras are also an issue: it's easier to watch someone's fingers on recorded video, but reading a cleartext password off a screen is trivial.

* In some situations, there is a trust dynamic involved. Do you type your password while your boss is standing over your shoulder watching? How about your spouse or partner? Your parent or child? Your teacher or students? At ATMs, there's a social convention of standing away from someone using the machine, but that convention doesn't apply to computers. You might not trust the person standing next to you enough to let him see your password, but don't feel comfortable telling him to look away. Password masking solves that social awkwardness.

* Security from screen scraping malware. This is less of an issue; keyboard loggers are more common and unaffected by password masking. And if you have that kind of malware on your computer, you've got all sorts of problems.

* A security "signal." Password masking alerts users, and I'm thinking users who aren't particularly security savvy, that passwords are a secret.

I believe that shoulder surfing isn't nearly the problem it's made out to be. One, lots of people use their computers in private, with no one looking over their shoulders. Two, personal handheld devices are used very close to the body, making shoulder surfing all that much harder. Three, it's hard to quickly and accurately memorize a random non-alphanumeric string that flashes on the screen for a second or so.

This is not to say that shoulder surfing isn't a threat. It is. And, as many readers pointed out, password masking is one of the reasons it isn't more of a threat. And the threat is greater for those who are not fluent computer users: slow typists and people who are likely to choose bad passwords. But I believe that the risks are overstated.

Password masking is definitely important on public terminals with short PINs. (I'm thinking of ATMs.) The value of the PIN is large, shoulder surfing is more common, and a four-digit PIN is easy to remember in any case.

And lastly, this problem largely disappears on the Internet on your personal computer. Most browsers include the ability to save and then automatically populate password fields, making the usability problem go away at the expense of another security problem (the security of the password becomes the security of the computer). There's a Firefox plug-in that gets rid of password masking. And programs like my own Password Safe allow passwords to be cut and pasted into applications, also eliminating the usability problem.

One approach is to make it a configurable option. High-risk banking applications could turn password masking on by default; other applications could turn it off by default. Browsers in public locations could turn it on by default. I like this, but it complicates the user interface.

A reader mentioned BlackBerry's solution, which is to display each character briefly before masking it; that seems like an excellent compromise.

I, for one, would like the option. I cannot type complicated WEP keys into Windows -- twice! what's the deal with that? -- without making mistakes. I cannot type my rarely used and very complicated PGP keys without making a mistake unless I turn off password masking. That's what I was reacting to when I said "I agree."

So was I wrong? Maybe. Okay, probably. Password masking definitely improves security; many readers pointed out that they regularly use their computer in crowded environments, and rely on password masking to protect their passwords. On the other hand, password masking reduces accuracy and makes it less likely that users will choose secure and hard-to-remember passwords, I will concede that the password masking trade-off is more beneficial than I thought in my snap reaction, but also that the answer is not nearly as obvious as we have historically assumed.

A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/07/...


The "Hidden Cost" of Privacy

Forbes ran an article talking about the "hidden" cost of privacy. Basically, the point was that privacy regulations are expensive to comply with, and a lot of that expense gets eaten up by the mechanisms of compliance and doesn't go toward improving anyone's actual privacy. This is a valid point, and one that I make in talks about privacy all the time. It's particularly bad in the United States, because we have a patchwork of different privacy laws covering different types of information and different situations and not a single comprehensive privacy law.

The meta-problem is simple to describe: those entrusted with our privacy often don't have much incentive to respect it. Examples include: credit bureaus such as TransUnion and Experian, who don't have any business relationship at all with the people whose data they collect and sell; companies such as Google who give away services -- and collect personal data as a part of that -- as an incentive to view ads, and make money by selling those ads to other companies; medical insurance companies, who are chosen by a person's employer; and computer software vendors, who can have monopoly powers over the market. Even worse, it can be impossible to connect an effect of a privacy violation with the violation itself -- if someone opens a bank account in your name, how do you know who was to blame for the privacy violation? -- so even when there is a business relationship, there's no clear cause-and-effect relationship.

What this all means is that protecting individual privacy remains an externality for many companies, and that basic market dynamics won't work to solve the problem. Because the efficient market solution won't work, we're left with inefficient regulatory solutions. So now the question becomes: how do we make regulation as efficient as possible? I have some suggestions:

* Broad privacy regulations are better than narrow ones.

* Simple and clear regulations are better than complex and confusing ones.

* It's far better to regulate results than methodology.

* Penalties for bad behavior need to be expensive enough to make good behavior the rational choice.

We'll never get rid of the inefficiencies of regulation -- that's the nature of the beast, and why regulation only makes sense when the market fails -- but we can reduce them.

Forbes article:
http://www.forbes.com/forbes/2009/0608/...


Fixing Airport Security

It's been months since the Transportation Security Administration has had a permanent director. If, during the job interview (no, I didn't get one), President Obama asked me how I'd fix airport security in one sentence, I would reply: "Get rid of the photo ID check, and return passenger screening to pre-9/11 levels."

Okay, that's a joke. While showing ID, taking your shoes off and throwing away your water bottles isn't making us much safer, I don't expect the Obama administration to roll back those security measures anytime soon. Airport security is more about CYA than anything else: defending against what the terrorists did last time.

But the administration can't risk appearing as if it facilitated a terrorist attack, no matter how remote the possibility, so those annoyances are probably here to stay.

This would be my real answer: "Establish accountability and transparency for airport screening." And if I had another sentence: "Airports are one of the places where Americans, and visitors to America, are most likely to interact with a law enforcement officer - and yet no one knows what rights travelers have or how to exercise those rights."

Obama has repeatedly talked about increasing openness and transparency in government, and it's time to bring transparency to the Transportation Security Administration (TSA).

Let's start with the no-fly and watch lists. Right now, everything about them is secret: You can't find out if you're on one, or who put you there and why, and you can't clear your name if you're innocent. This Kafkaesque scenario is so un-American it's embarrassing. Obama should make the no-fly list subject to judicial review.

Then, move on to the checkpoints themselves. What are our rights? What powers do the TSA officers have? If we're asked "friendly" questions by behavioral detection officers, are we allowed not to answer? If we object to the rough handling of ourselves or our belongings, can the TSA official retaliate against us by putting us on a watch list? Obama should make the rules clear and explicit, and allow people to bring legal action against the TSA for violating those rules; otherwise, airport checkpoints will remain a Constitution-free zone in our country.

Next, Obama should refuse to use unfunded mandates to sneak expensive security measures past Congress. The Secure Flight program is the worst offender. Airlines are being forced to spend billions of dollars redesigning their reservations systems to accommodate the TSA's demands to preapprove every passenger before he or she is allowed to board an airplane. These costs are borne by us, in the form of higher ticket prices, even though we never see them explicitly listed.

Maybe Secure Flight is a good use of our money; maybe it isn't. But let's have debates like that in the open, as part of the budget process, where it belongs.

And finally, Obama should mandate that airport security be solely about terrorism, and not a general-purpose security checkpoint to catch everyone from pot smokers to deadbeat dads.

The Constitution provides us, both Americans and visitors to America, with strong protections against invasive police searches. Two exceptions come into play at airport security checkpoints. The first is "implied consent," which means that you cannot refuse to be searched; your consent is implied when you purchased your ticket. And the second is "plain view," which means that if the TSA officer happens to see something unrelated to airport security while screening you, he is allowed to act on that.

Both of these principles are well established and make sense, but it's their combination that turns airport security checkpoints into police-state-like checkpoints.

The TSA should limit its searches to bombs and weapons and leave general policing to the police - where we know courts and the Constitution still apply.

None of these changes will make airports any less safe, but they will go a long way to de-ratcheting the culture of fear, restoring the presumption of innocence and reassuring Americans, and the rest of the world, that - as Obama said in his inauguration speech - "we reject as false the choice between our safety and our ideals."

This essay originally appeared, without hyperlinks, in the New York Daily News.
http://www.nydailynews.com/opinions/2009/06/24/...
http://www.schneier.com/blog/archives/2009/06/...


Schneier News

I am speaking at Black Hat and DefCon, in Las Vegas, on 30 and 31 July 2009.
https://www.blackhat.com/html/bh-usa-09/...
http://defcon.org/html/defcon-17/dc-17-index.html


Homomorphic Encryption Breakthrough

Last month, IBM made some pretty brash claims about homomorphic encryption and the future of security. I hate to be the one to throw cold water on the whole thing -- as cool as the new discovery is -- but it's important to separate the theoretical from the practical.

Homomorphic cryptosystems are ones where mathematical operations on the ciphertext have regular effects on the plaintext. A normal symmetric cipher -- DES, AES, or whatever -- is not homomorphic. Assume you have a plaintext P, and you encrypt it with AES to get a corresponding ciphertext C. If you multiply that ciphertext by 2, and then decrypt 2C, you get random gibberish instead of P. If you got something else, like 2P, that would imply some pretty strong nonrandomness properties of AES and no one would trust its security.

The RSA algorithm is different. Encrypt P to get C, multiply C by 2, and then decrypt 2C -- and you get 2P. That's a homomorphism: perform some mathematical operation to the ciphertext, and that operation is reflected in the plaintext. The RSA algorithm is homomorphic with respect to multiplication, something that has to be taken into account when evaluating the security of a security system that uses RSA.

This isn't anything new. RSA's homomorphism was known in the 1970s, and other algorithms that are homomorphic with respect to addition have been known since the 1980s. But what has eluded cryptographers is a fully homomorphic cryptosystem: one that is homomorphic under both addition and multiplication and yet still secure. And that's what IBM researcher Craig Gentry has discovered.

This is a bigger deal than might appear at first glance. Any computation can be expressed as a Boolean circuit: a series of additions and multiplications. Your computer consists of a zillion Boolean circuits, and you can run programs to do anything on your computer. This algorithm means you can perform arbitrary computations on homomorphically encrypted data. More concretely: if you encrypt data in a fully homomorphic cryptosystem, you can ship that encrypted data to an untrusted person and that person can perform arbitrary computations on that data without being able to decrypt the data itself. Imagine what that would mean for cloud computing, or any outsourcing infrastructure: you no longer have to trust the outsourcer with the data.

Unfortunately -- you knew that was coming, right? -- Gentry's scheme is completely impractical. It uses something called an ideal lattice as the basis for the encryption scheme, and both the size of the ciphertext and the complexity of the encryption and decryption operations grow enormously with the number of operations you need to perform on the ciphertext -- and that number needs to be fixed in advance. And converting a computer program, even a simple one, into a Boolean circuit requires an enormous number of operations. These aren't impracticalities that can be solved with some clever optimization techniques and a few turns of Moore's Law; this is an inherent limitation in the algorithm. In one article, Gentry estimates that performing a Google search with encrypted keywords -- a perfectly reasonable simple application of this algorithm -- would increase the amount of computing time by about a trillion. Moore's law calculates that it would be 40 years before that homomorphic search would be as efficient as a search today, and I think he's being optimistic with even this most simple of examples.

Despite this, IBM's PR machine has been in overdrive about the discovery. Its press release makes it sound like this new homomorphic scheme is going to rewrite the business of computing: not just cloud computing, but "enabling filters to identify spam, even in encrypted email, or protection information contained in electronic medical records." Maybe someday, but not in my lifetime.

This is not to take anything away anything from Gentry or his discovery. Visions of a fully homomorphic cryptosystem have been dancing in cryptographers' heads for thirty years. I never expected to see one. It will be years before a sufficient number of cryptographers examine the algorithm that we can have any confidence that the scheme is secure, but -- practicality be damned -- this is an amazing piece of work.

A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/07/...


New Attack on AES

There's a new cryptanalytic attack on AES that is better than brute force:

"Abstract. In this paper we present two related-key attacks on the full AES. For AES-256 we show the first key recovery attack that works for all the keys and has complexity 2^119, while the recent attack by Biryukov-Khovratovich-Nikolic works for a weak key class and has higher complexity. The second attack is the first cryptanalysis of the full AES-192. Both our attacks are boomerang attacks, which are based on the recent idea of finding local collisions in block ciphers and enhanced with the boomerang switching techniques to gain free rounds in the middle."

In an e-mail, the authors wrote: "We also expect that a careful analysis may reduce the complexities. As a preliminary result, we think that the complexity of the attack on AES-256 can be lowered from 2^119 to about 2^110.5 data and time. We believe that these results may shed a new light on the design of the key-schedules of block ciphers, but they pose no immediate threat for the real world applications that use AES."

Agreed. While this attack is better than brute force -- and some cryptographers will describe the algorithm as "broken" because of it -- it is still far, far beyond our capabilities of computation. The attack is, and probably forever will be, theoretical. But remember: attacks always get better, they never get worse. Others will continue to improve on these numbers. While there's no reason to panic, no reason to stop using AES, no reason to insist that NIST choose another encryption standard, this will certainly be a problem for some of the AES-based SHA-3 candidate hash functions.

https://cryptolux.uni.lu/mediawiki/uploads/1/1a/...
https://cryptolux.org/FAQ_on_the_attacks


MD6 Withdrawn from SHA-3 Competition

In other SHA-3 news, Ron Rivest has suggested that his MD6 algorithm be withdrawn from the SHA-3 competition. From an e-mail to a NIST mailing list: "We suggest that MD6 is not yet ready for the next SHA-3 round, and we also provide some suggestions for NIST as the contest moves forward."

Basically, the issue is that in order for MD6 to be fast enough to be competitive, the designers have to reduce the number of rounds down to 30-40, and at those rounds, the algorithm loses its proofs of resistance to differential attacks" "Thus, while MD6 appears to be a robust and secure cryptographic hash algorithm, and has much merit for multi-core processors, our inability to provide a proof of security for a reduced-round (and possibly tweaked) version of MD6 against differential attacks suggests that MD6 is not ready for consideration for the next SHA-3 round."

This is a very classy withdrawal, as we expect from Ron Rivest -- especially given the fact that there are no attacks on it, while other algorithms have been seriously broken and their submitters keep trying to pretend that no one has noticed.

A copy of this blog post, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/07/md6.html


Ever Better Cryptanalytic Results Against SHA-1

The SHA family (which, I suppose, should really be called the MD4 family) of cryptographic hash functions has been under attack for a long time. In 2005, we saw the first cryptanalysis of SHA-1 that was faster than brute force: collisions in 2^69 hash operations, later improved to 2^63 operations. A great result, but not devastating. But remember the great truism of cryptanalysis: attacks always get better, they never get worse. Last week, devastating got a whole lot closer. A new attack can, at least in theory, find collisions in 2^52 hash operations -- well within the realm of computational possibility. Assuming the cryptanalysis is correct, we should expect to see an actual SHA-1 collision within the year.

Note that this is a collision attack, not a pre-image attack. Most uses of hash functions don't care about collision attacks. But if yours does, switch to SHA-2 immediately.

This is why NIST is administering a SHA-3 competition for a new hash standard. And whatever algorithm is chosen, it will look nothing like anything in the SHA family (which is why I think it should be called the Advanced Hash Standard, or AHS).

A copy of this essay, with all embedded links, is here:
http://www.schneier.com/blog/archives/2009/06/...


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CRYPTO-GRAM is written by Bruce Schneier. Schneier is the author of the best sellers "Schneier on Security," "Beyond Fear," "Secrets and Lies," and "Applied Cryptography," and an inventor of the Blowfish, Twofish, Phelix, and Skein algorithms. He is the Chief Security Technology Officer of BT BCSG, and is on the Board of Directors of the Electronic Privacy Information Center (EPIC). He is a frequent writer and lecturer on security topics. See <http://www.schneier.com>.

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