[ISN] CRYPTO-GRAM, April 15, 2001

From: InfoSec News (isnat_private)
Date: Sun Apr 15 2001 - 03:32:42 PDT

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    Forwarded by: Bruce Schneier <schneierat_private>
                     April 15, 2001
                   by Bruce Schneier
                    Founder and CTO
           Counterpane Internet Security, Inc.
    A free monthly newsletter providing summaries, analyses, insights, and
    commentaries on computer security and cryptography.
    Back issues are available at
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    Copyright (c) 2001 by Counterpane Internet Security, Inc.
    ** *** ***** ******* *********** *************
    In this issue:
          Natural Advantages of Defense: What Military History
            Can Teach Network Security, Part 1
          A Correction: nCipher
          CSI's Computer Crime and Security Survey
          Crypto-Gram Reprints
          Counterpane Internet Security News
          Fake Microsoft Certificates
          Comments from Readers
    ** *** ***** ******* *********** *************
               Natural Advantages of Defense:
    What Military History Can Teach Network Security, Part 1
    Military strategists call it "the position of the interior."  The defender
    has to defend against every possible attack.  The attacker, on the other
    hand, only has to choose one attack, and he can concentrate his forces on
    that one attack.  This puts the attacker at a natural advantage.
    Despite this, in almost every sort of warfare the attacker is at a
    disadvantage.  More people are required to attack a city (or castle, or
    house, or foxhole) than are required to defend it.  The ratios change over
    history -- the defense's enormous advantage in WW I trench warfare lessened
    with the advent of the WW II blitzkrieg, for example -- but the basic truth
    remains: all other things being equal, the military defender has a
    considerable advantage over the attacker.
    This has never been true on the Internet.  There, the attacker has an
    advantage.  He can choose when and how to attack.  He knows what particular
    products the defender is using (or even if he doesn't, it usually is one of
    a small handful of possibilities).  The defender is forced to constantly
    upgrade his system to eliminate new vulnerabilities and watch every
    possible attack, and he can still get whacked when an attacker tries
    something new...or exploits a new weakness that can't easily be
    patched.  The position of the interior is a difficult position indeed.
    A student of military history might be tempted to look at the Internet and
    wonder: "What is it about warfare in the real world that aids the defender,
    and can it apply to network security?"
    Good question.
    The defender's military advantage comes from two broad strengths: the
    ability to quickly react to an attack, and the ability to control the
    The first strength is probably the most important; a defender can more
    quickly shift forces to resupply existing forces, shore up defense where it
    is needed, and counterattack.  I've written extensively about how this
    applies to computer security: how detection and response are critical, the
    need for trained experts to quickly analyze and react to attacks, and the
    importance of vigilance.  I've built Counterpane Internet Security's
    Managed Security Monitoring service around these very principles, precisely
    because it can dramatically shift the balance from attacker to defender.
    The defender's second strength also gives him a strong advantage.  He has
    better knowledge of the terrain: where the good hiding places are, where
    the mountain passes are, how to sneak through the caves.  This provides the
    defender with an enormous advantage.  He can modify the terrain: building
    castles or surface-to-air missile batteries, digging trenches or tunnels,
    erecting guard towers or pillboxes.  And he can choose the terrain on which
    to stand and defend: behind the stone wall, atop the hill, on the far side
    of the bridge, in the dense jungle.  The defender can use terrain to his
    maximum advantage; the attacker is stuck with whatever terrain he is forced
    to traverse.
    On the Internet, this second advantage is one that network defenders seldom
    take advantage of: knowledge of the network.  The network administrator
    knows exactly how his network is built (or, at least, he should), what it
    is supposed to do, and how it is supposed to do it.  Any attacker except a
    knowledgeable insider has no choice but to stumble around, trying this and
    that, trying to figure out what's where and who's connected to whom.  And
    it's about time we exploited this advantage.
    Think about burglar alarms.  The reason they work is that the attacker
    doesn't know they're there.  He might successfully bypass a door lock, or
    sneak in through a second-story window, but he doesn't know that there is a
    pressure plate under this particular rug, or an electric eye across this
    particular doorway.  McGyver-like antics aside, any burglar wandering
    through a well-alarmed building is guaranteed to trip something sooner or
    Traditional computer security has been static: install a firewall,
    configure a PKI, add access-control measures, and you're done.  Real
    security is dynamic.  The defense has to be continuously vigilant, always
    ready for the attack.  The defense has to be able to detect attacks
    quickly, before serious damage is done.  And the defense has to be able to
    respond to attacks effectively, repelling the attacker and restoring order.
    This kind of defense is possible in computer networks.  It starts with
    effective sensors: firewalls, well-audited servers and routers,
    intrusion-detection products, network burglar alarms.  But it also includes
    people: trained security experts that can quickly separate the false alarms
    from the real attacks, and who know how to respond.  This is security
    through process.  This is security that recognizes that human intelligence
    is vital for a strong defense, and that automatic software programs just
    don't cut it.
    It's a military axiom that eventually a determined attacker can defeat any
    static defense.  In World War II, the British flew out to engage the
    Luftwaffe, in contrast to the French who waited to meet the Wehrmacht at
    the Maginot Line.  The ability to react quickly to an attack, and intimate
    knowledge of the terrain: these are the advantages the position of the
    interior brings.  A good general knows how to take advantage of them, and
    they're what we need to leverage effectively for computer security.
    The importance of detection and response in network security:
    Marcus Ranum has written and spoken about Internet burglar alarms.
    ** *** ***** ******* *********** *************
                 A Correction: nCipher
    In the Crypto-Gram of January 2000, I wrote about a security vulnerability
    publicized by nCipher.  I called this a publicity attack, meaning an attack
    more designed to call publicity to the discoverer than the vulnerability
    itself.  In any case, my write-up contained a factual error: I claimed that
    nCipher distributed a tool that exploited this error, while in fact they
    did not.  (I remember reading this somewhere, but I cannot remember
    where.  And searching the various news archives, I can't find anyone else
    who states this "fact.")
    nCipher was not pleased by this error.
    In the February Crypto-Gram I published a letter from nCipher correcting
    this error.  I thought this was the end of it, and I moved on to other
    things.  Unfortunately, in the January 2001 Crypto-Gram I published the URL
    to the January 2000 article.  (This is what I do in the "Crypto-Gram
    Reprints" section.)  This whole escapade never entered my mind; I didn't
    think about the history of the article.
    Unfortunately, people read (or reread) the article without seeing the
    correction.  And some of them contacted nCipher to complain.  And nCipher
    (understandably) got all pissed off at me once again.
    So I am trying to correct the record.  nCipher claims that they did not
    release a tool that exploits the vulnerability, and I believe them.  They
    are a responsible company, and despite our disagreements as to the
    motivations of their year-old discovery, they are an honorable and
    upstanding company in the security community.
    For the record, nCipher has not threatened me or Counterpane with legal
    action.  (I consider this admirable, which is why I mention it.)  They
    contacted me personally.  They have a valid complaint, and I
    apologize.  All you guys, stop bugging them.  And I hope that come next
    January, I don't forget about this once again when it comes time to write
    the "Crypto-Gram Reprints" section.
    The original essay:
    nCipher's letter:
    ** *** ***** ******* *********** *************
        CSI's Computer Crime and Security Survey
    For the past six years, the Computer Security Institute has conducted an
    annual computer crime survey.  The results are not statistically meaningful
    by any stretch of the imagination -- they're based on about 500 survey
    responses each year -- but it is the most interesting data on real-world
    computer and network security that we have.  And the numbers tell a
    coherent story.  (I'm just going to talk about the 2001 numbers, but the
    numbers for previous years track pretty well.)
    64% of respondents reported "unauthorized use of computer systems" in the
    last year.  25% said that they had no such unauthorized uses, and 11% said
    that they didn't know.  (I believe that those who reported no intrusion
    actually don't know.)  The number of incidents was all over the map, and
    the number of insider versus outsider incidents was roughly equal.  70% of
    respondents report their Internet connection as a frequent point of attack
    (this has been steadily rising over the six years), 18%  report remote
    dial-in as a frequent point of attack (this has been declining), and 31%
    report internal systems as a frequent point of attack (also declining).
    The types of attack range from telcom fraud to laptop theft to
    sabotage.  40% experienced a system penetration, 36% a denial of service
    attack.  26% reported theft of proprietary information, and 12% financial
    fraud.  18% reported sabotage.  23% had their Web sites hacked (another 27%
    didn't know), and over half of those had their Web sites hacked ten or more
    times.  (90% of the Web site hacks were just vandalism, but 13% included
    theft of transaction information.)
    What's interesting is that all of these attacks occurred despite the wide
    deployment of security technologies: 95% have firewalls, 61% an IDS, 90%
    access control of some sort, 42% digital IDs, etc.  Clearly the
    technologies are not working sufficiently well.
    The financial consequences are scary.  Only 196 respondents would quantify
    their losses, which totaled $378M.  From under 200 companies!  In one
    year!  This is a big deal.
    More people are reporting these incidents to the police: 36% this
    year.  Those who didn't report were concerned about negative publicity
    (90%) and competitors using the incident to their advantage (70%).
    This data is not statistically rigorous, and should be viewed as suspect
    for several reasons.  First, it's based on the database of information
    security professionals that the CSI has (3900 people), self-selected by the
    14% who bothered to respond.  (The people responding are probably more
    knowledgeable than the average sysadmin, and the companies they work for
    more aware of the threats.  Certainly there are some large companies
    represented here.)  Second, the data is not necessarily accurate, but is
    only the best recollections of the respondents.  And third, most hacks
    still go unnoticed; the data only represents what the respondents actually
    Even so, the trends are unnerving.  It's clearly a dangerous world, and has
    been for years.  It's not getting better, even given the widespread
    deployment of computer security technologies.  And it's costing American
    businesses billions, easily.
    The survey (you have to give them your info, and they will send you a paper
    ** *** ***** ******* *********** *************
                 Crypto-Gram Reprints
    Microsoft Active Setup "Backdoor"
    Cryptography: The Importance of Not Being Different:
    Threats Against Smart Cards:
    Attacking Certificates with Computer Viruses:
    ** *** ***** ******* *********** *************
    Government warning about ways to bypass an IDS:
    Good articles on building secure Linux:
    This is the FBI affidavit about Robert Hanssen that discusses the letter
    the FBI decrypted:
    One of the secrets Hanssen told the Russians was that the U.S. dug a tunnel
    under the Soviet embassy in Washington to eavesdrop on their
    communications.  From the March 19th Newsweek article on the subject:
    "laser beams could pick up vibrations from the keystrokes of Soviet
    ciphering machines -- helping to decode their signals."  This is an example
    of what I call "side-channel cryptanalysis," using information other than
    the plaintext and ciphertext to cryptanalyze traffic.  I have long believed
    it to be the primary way cryptanalysis is done in the intelligence community.
    Side Channel Cryptanalysis:
    I've already written about the Eastern European hackers stealing credit
    card numbers, the FBI's warning, and the fact that the thieves were using
    documented and fixable security vulnerabilities.  Well, the Center for
    Internet Security has released a tool that scans your network to see if it
    is vulnerable to the specific attacks used by these groups.  On the one
    hand, this is kind of dorky: all the vulnerabilities are well known, and
    any scanner is likely to pick them up...and more.  But on the other hand,
    this is an excellent idea.  The tool works, it's free, and addresses a
    problem in the news.  If people download and run this tool, it will help
    increase their security.  Kudos to the CIS for making this available.
    Businesses are losing more to Internet crime, even though they're using
    more security technology.
    Write your own Visual Basic worm and infect the Net!
    Remember kids, this is "for educational use only."
    Remember Microsoft's claim that the security features added to the next
    versions of Office and Windows would make it extremely difficult to
    pirate?  Well, the security lasted negative one months.
    Son of CPRM:
    Impressive identity thefts:
    The revised 802.11 security standard is more public:
    But more flaws in its security have been found:
    Security and 802.11 wireless:
    Interesting article on the NSA:
    A vulnerability was found in the OpenPGP standard.  If an attacker can
    modify the victim's encrypted private key file, he can intercept a signed
    message and then figure out the victim's signing key.  (Basically, if the
    attacker replaces the public key parameters with weak ones, the next
    signature exposes the private key.)  This is a problem with the data
    format, and not with the cryptographic algorithms.  I don't think it's a
    major problem, since someone who can access the victim's hard drive is more
    likely to simply install a keyboard sniffer.  But it is a flaw, and shows
    how hard it is to get everything right.  Excellent cryptanalysis work here.
    News reports:
    The research paper:
    More dire warnings from the FBI:
    Web bug reports.  See who's using Web bugs.
    Microsoft Outlook virus.  (Note: this is a joke.)
    This is a clever idea to help stop cell phone theft:
    Yet another Windows feature that will be riddled with
    insecurities.  Windows XP will have something called "shared desktop" that
    will allow users to manipulate their PC over the Internet.  Read the last
    paragraph of this article.  Does anyone think this will be secure?
    Microsoft redefines the word "secure."  Remember when "secure" meant "not
    leaking private or secret data against the owner's wishes"?  Microsoft
    thinks it means "unable to duplicate copyrighted works that are nonetheless
    within the Fair Use doctrine."
    Another Microsoft disaster in the making: an operating system that
    automatically updates itself without the user's knowledge or consent:
    Trying to make a Napster-proof CD:
    "War Driving": Driving around with an 802.11-equipped PC, looking for
    unsecured networks to access:
     From a 1996 NSA document:  "This instruction incorporates a philosophy of
    'risk management' in lieu of the 'risk avoidance' philosophy employed in
    the previous document."  And: "The emphasis is placed on 'detection' of
    attempted penetration in lieu of 'prevention' of penetration."  Good for them.
    First-ever cross-platform virus: affects Windows and Linux:
    SEC may regulate Internet security:
    An April Fools RFC about firewalls:
    Another Internet Explorer hole.  Normally, I wouldn't bother.  But this
    quote is telling:  "Security 'is an ongoing issue with Internet Explorer
    because it is such a complicated software that interoperates with many
    other applications that it is too difficult to figure out all of these
    vulnerabilities,' said Richard Smith, chief privacy officer at the
    Denver-based nonprofit group the Privacy Foundation."
    Companies who sell security software exacerbate the problem, as they try to
    sell software solutions to people problems.  (I've been saying this for a
    Here's a hacking tool designed to sneak past IDSs:
    Good article on the reality vs. hype of cyberterrorism:
    I've already written about the dangers of software auto-update
    features.  We now have a mass-market product instance of this.  One day
    ReplayTV updated itself to disable a valuable feature:
    ** *** ***** ******* *********** *************
    Counterpane Internet Security News
    Counterpane announced more customers:
    Cisco supports Counterpane's Managed Security Monitoring:
    Schneier will be speaking at the CATO Institute, in Washington DC, on April
    Schneier will be speaking at BlackHat Asia, in Hong Kong (4/23) and
    Singapore (4/26):
    Schneier will be speaking at the Investment Company Institute quarterly
    meeting in Washington DC on May 2:
    Schneier will be speaking at the BankLink annual conference in New York on
    May 4:
    Schneier will be speaking at the Los Angeles ISSA Conference on May 10:
    Schneier will be speaking at the New York ISSA Conference on May 17:
    Schneier spoke on NPR about the difficulty of copy protection on personal
    computers.  You can listen to the audio of his talk on the web.
    ** *** ***** ******* *********** *************
              Fake Microsoft Certificates
    Ah, the tribulations of PKI.  Apparently someone impersonated Microsoft to
    VeriSign, and got a couple of certificates in Microsoft's name.  Oops.
    This is a big deal.  Microsoft has been pushing trusted code as a cure-all
    for Internet viruses and other rogue programs.  The idea would be that a
    user could only allow signed code from trusted sources to run on his or her
    computer.  But if you can't trust the certificates, this all falls apart.
    There are a lot of details that are unclear.  Some news reports claim that
    the certificates will expire in a year, others claim that they will be good
    forever.  (Expired certificates are all over the Web; almost nobody pays
    attention.)  VeriSign claims that they discovered the fraud almost
    immediately, and that there has been no other fraud.  While I agree that
    their audit processes caught the problem in this case -- and I applaud
    their going public with it so quickly -- I just don't believe they can be
    sure more clever fraud remains unnoticed.
    What's most interesting is that there is no way to revoke the certificates
    (Windows has no CRL features), even though there have been rogue
    certificates before.  Revocation is critical to making PKI work, and it's
    one of the major holes in most consumer PKI applications.
    Microsoft has tried to paint this problem as 1) not a security
    vulnerability, and 2) all VeriSign's fault anyway.  But if it's not a
    security vulnerability, why are they issuing all these security patches for
    Internet Explorer?
    News reports:
    Typical Microsoft evasiveness:
    Especially interesting is the number of patches Microsoft needed to issue
    to ensure that the revoked keys are actually revoked.
    Ten Risks of PKI:
    ** *** ***** ******* *********** *************
                Comments from Readers
    From: Bruce Peaslee <bpeasleeat_private-costa.ca.us>
    Subject: Security Patches
    I used to religiously -- and automatically -- apply all security patches
    for Microsoft Office, but no more!  One of the more recent patches to
    Outlook 2000 made it impossible to receive executable attachments.  This
    includes, of course, Microsoft Office files themselves.  Thus I could not
    e-mail myself an Excel file I was working on at work.  I had to uninstall
    then reinstall the whole system.  I'm not sure what the moral is here, but
    even if you do make the attempt, you can get unexpected and unsatisfactory
    From: "Mike O'Connor" <mjoat_private>
    Subject: Security Patches
    Vendors often release patches that do more than address a discrete security
    issue.  They'll incorporate other bug fixes and performance enhancements,
    which potentially introduce new bugs, slowdowns, quirks, downtime,
    integration issues, and security downfalls.  There's often a sense that the
    vendor knows what's best for you, even though they may have an imperfect
    understanding of how you use their stuff at a higher level.  Installing the
    new patch in the name of security may not be the smartest thing to do if
    the new "features" of the patch act as a DOS attack or compromise system
    In most cases, the guts of the system environments that need patching are
    unknown quantities to administrators.  They don't have the time, charter,
    expertise, access to source and build environments, etc. to dig into what
    makes their system environments tick at a low level.  Admins gain
    confidence in what they've built from their black boxes by looking at
    high-level performance over time.  When asked to apply the latest security
    patches, what they see (when not swearing under their breath) is this
    unknown amount of entropy potentially kicking them.  "Simply" applying
    patches takes LOTS of time when factoring in testing.
    With all that in mind, I think we need to preach the following:
    a) Vendors need to get it in their consciousness and processes that getting
    security fixes into their products should be separate from getting other
    stuff in their products.  Admins need to get fixes from their vendors which
    consist of EXACTLY the same as what they run today plus the one lone
    security fix.
    b) Admins need to be aware of what patches are out there and articulate
    clearly when they don't run with them.  A security patch should be treated
    as a potentially actionable system event every bit as much as a "disk is
    full" message.  (That's where Counterpane can fit in, letting customers
    know and tracking how they respond.)
    Otherwise, the situation with patches will never get better.
    From: "Dunn, Andrew (Reading)" <Andrew.Dunnat_private>
    Subject: Insurance
    I don't normally respond to newsletters, but your article on insurance
    really is very wide of the mark.  I could write a treatise on why it is so
    badly misconceived, but I don't have that much time to spare.  Briefly your
    fundamental error is to believe that insurance provides restitution for
    loss.  It does not.
    Insurance provides financial compensation.  Whatever the type of insurance,
    the insuree obtains the insurance for events which he does not want to
    happen.  In some, but only a very few cases, those events relate to a
    financial loss, such as, if I have my wallet stolen and I only have cash in
    my wallet, and no other documents or credit cards.  In most cases, the loss
    is not primarily financial.  If I have accident insurance, I receive cash
    if I lose an arm, but it does not replace the arm.
    It's exactly the same in business.  Businesses do not exist purely to
    generate cash, although that's an important, and necessary objective.  All
    businesses have other objectives than simply making the maximum profit in
    the next quarter, regardless of what happens after that.  Different
    businesses have different objectives and core values.  Some aim for
    long-term growth, some aim for market leadership, some aim for technology
    If a business goes into liquidation because of a security hack, then
    financial compensation does not replace the business.  In the UK, we have a
    classical example of why compensation does not make up for loss.
    In the foot and mouth crisis, many farmers are having their entire
    livestock destroyed after many years of building it up.  This is a terrible
    time for farmers despite the fact that they will receive financial
    compensation.  We are starting to hear the first cases of farmers
    committing suicide.  There is no greater loss than that.  And insurance
    does not have any play in this at all.
    From: "Daniel A. Graifer" <dgraiferat_private>
    Subject: Insurance
    As an economist, let me comment on this:
     >The real world doesn't work this way.  Businesses achieve
     >security through insurance.  They take the risks they are
     >not willing to accept themselves, bundle them up, and pay
     >someone else to make them go away.  If a warehouse is
     >insured properly, the owner really doesn't care if it
     >burns down or not.  If he does care, he's underinsured.
    In general with insurance, this is called the moral hazard problem.  The
    insurer figures that (in your example) the warehouse owner is the best
    placed to be sure that fire safety regulations and common sense preventions
    are carried out.  That's why insurance policies have deductibles: to
    encourage responsible action by preventing 100% coverage of the risk
    leading to irresponsible behavior.
    This is also related to the other big bugaboo of insurance:  "adverse
    selection":  Insurance buyers have better knowledge of their risk
    characteristics than the insurers, leading higher risk clients to
    over-insure (because it's cheap relative to the risks) and low risk clients
    to under-insure.  That's why non-elective group insurance is cheaper than
    individual policies in any risk category.
    From: "John J. Adelsberger III" <jjaat_private>
    Subject: Insurance
    You have written many times about how mistaken you were when you used to
    say that mathematics could solve security problems.  This is good, because
    you're right; mathematics alone will not solve any problem which is no
    purely mathematical in nature.
    However, the basic mistake you made was not assuming that math could
    provide security.  The basic mistake was the assumption that magic bullets
    really exist, which solve hard problems neatly, cleanly, and without any
    side effects.
    You might find it interesting to read your own article on insurance over
    again in light of this fact.  You like to say "repeat after me."  Well,
    repeat after me: insurance is not a magic bullet.  Magic bullets do not exist.
    You wrote this:
     >When I talk about this future at conferences, a common
     >objection I hear is that premium calculation is
     >impossible.  Again, this is a technical mentality
     >talking.  Sure, insurance companies like well-understood
     >risk profiles and carefully calculated premiums.  But
     >they also insure satellite launches and the palate of
     >wine critic Robert Parker.
    Here's how I can rewrite it to be a little less propagandistic:  "When I
    talk about this future at conferences, a common objection I hear is that it
    is impossible to calculate rationally correct premiums free from subjective
    whimsy.  The answer is simple: premiums will be calculated
    irrationally.  Favoritism, corporate inertia, reputation, and an old boys
    network will be as important as quality.  The ability to pass meaningless
    certifications with inflated prices and get face time with dough-faced
    meeting monkeys will be what counts."
    Doesn't sound quite so rosy this time, does it?  And yet, you know that it
    is the same thing you said: do you really believe there's a rational way to
    value the palate of a wine critic up front?!
    The irony here is that you think this will somehow dramatically improve the
    quality of security products.  In fact, it will do precisely the opposite:
    it will make it "ok" to produce, sell, buy, and use lousy products.  Even
    experts will agree, in time.  Do you know why most homes are so easy to
    break into?  Because there's no economic benefit to securing them; just
    getting insurance is so much cheaper!
    Since you mention premium manipulation as economic incentive to do the
    right thing, here's something you'll never get an insurance guy to admit:
    The real reason they toy with premiums for "good" customers is purely
    marketing.  It gets them more insurance sales revenue per policy over the
    long run than they'd otherwise have.  They don't really think they can
    predict the odds of your house being broken into, much less the change in
    those odds from installing deadbolts and shatter alarms.  They just pretend
    to do that because otherwise the government would nail them for illegal
    price discrimination, product tying, and so on.  They try, of course, to
    have a rough idea of how many payouts they're going to have to make in a
    year, but that's hardly at the level of one claim; that's just based on
    gross statistics over the last x years in y area.
    Insurance?  Yes.  It is coming.  Panacea?  Well, if you want to make a bet
    on that, let me know.  I'm always willing to supplement my income.
    From: "Fred Renner" <frennerat_private>
    Subject: Insurance
    In the mid-80s I was trying to sell various electronic security-enhancing
    technologies to companies that were being threatened or damaged
    substantially by new vulnerabilities in both physical and virtual
    worlds.  In most of the commercial (versus government) enterprises the
    response was leaning, just as you described, toward insurance as the
    answer.  So I approached some insurance companies with the idea that they
    could reduce damage claims by encouraging or rewarding use of better
    security practices and technologies.  There was even historical precedent
    in the insurance companies collectively "inventing" private fire
    departments.  What I learned during that brief and unrewarding sales effort
    was informative as well as discouraging, at least for me.
    The insurance industry is a deeply multilayered structure, with the first
    layer of companies selling risk protection to consuming organizations or
    individuals and buying risk protection from Layer #2 insurance companies,
    which may spread it among a consortium of their peers or buy protection
    policies from Layer #3.  Pricing of all these exchanges is based on
    industry-wide experiences.  Consequently, the first-layer companies have no
    immediate incentive to encourage the use of loss-reducing
    technologies.  Layers #2 and above are too far removed from the consuming
    organizations to care about or influence their behavior.
    The net result is a structure that effectively discourages using practices
    to inhibit the criminal population and actually subsidizes them by "taxing"
    the whole economy.  In evolutionary terms, a steady food supply encourages
    population growth and we are certainly seeing a growth in virtual
    vermin.  It may be an efficient solution in bean-counting terms but it has
    always galled me.  Wish I had an answer.
    From: /dev/null <nullat_private>
    Subject: Attrition.org's Web site Defacement Data
    Hi, Bruce.  In the recent Cryptogram, you referenced us:
     >Security patches aren't being applied:
     >Best quote:  "Failing to responsibly patch computers led
     >to 99 percent of the 5,823 Web site defacements last
     >year, up 56 percent from the 3,746 Web sites defaced in
     >1999, according to security group Attrition.org."  I'm
     >not sure how they know, but is scary nonetheless.
    Shockingly enough, ZDNet put words in our mouth.  The stats on defacements
    are ours; that's what we do.  We mirror defacements and provide statistical
    information about them.  We do not, however, speculate as to how or why
    sites were defaced.  Certainly, it's usually quite obvious to us what tools
    and scripts defacers are using (i.e., last summer there was an astounding
    spike in Red Hat Linux defacements, and most of those boxes defaced had
    port 21 open...it's an easy guess that they were hit with wu-ftpd's
    vulnerability); however, unless we have concrete evidence of some kind, we
    don't speculate to the press on what vulnerability was used.  At most, a
    general statement could be made that the vast majority of defacements occur
    due to known vulnerabilities that have not been patched or otherwise
    defended against.  We know of defacements that were compromised by weak
    passwords, social engineering, or other unusual approaches, but by far most
    of them are simply a matter of kids using available tools to exploit
    well-known holes for which patches are available.
    From: Greg Guerin <glguerinat_private>
    Subject: Codesigning
    In your February "Comments from Readers" section, Phillip Hallam-Baker
    <hallamat_private> wrote:
     >If the hackers circulated the private key to any great
     >extent, the compromise would soon be known.
    What if hundreds or thousands of different hackers are doing this?  What if
    an autonomous software agent (or hundreds of them) does it dozens of times
    a day?  How many humans are actually monitoring this kind of thing at
    VeriSign (which actually issues and revokes the Authenticode code-signing
    certificates, not Microsoft)?  How long would it take for them to find out,
    especially if the worm is not wreaking immediate havoc, but only sneaking
    into place for a later or subtler exploit?
     >The certificate would be revoked and would not be
     >accepted by the Authenticode signing service for future
     >code signing requests.
    This implies that there is a centralized Authenticode service that hands
    out single-use permissions to sign each individual piece of code; i.e.,
    centralized approval of each signature created.  I could be wrong, and I'd
    happily plead ignorance, but I don't think Authenticode works that way.  An
    Authenticode signing key is just a VeriSign Class 3 code-signing key, and
    any entity that has the private key and the cert can create the
    Authenticode signature.
     >Software that had already been signed would still pose
     >a risk, but this could be controlled through warnings in
     >the press.
    Ah, yes, "warnings in the press," whose efficacy is so conveniently
    illustrated in "The Security Patch Treadmill."
    Another illustration is the recent incident of two Authenticode
    certificates erroneously issued by VeriSign to someone posing as "Microsoft
    Corporation."  These certificates assert that the key-holder is "Microsoft
    Corporation," and someone paid real money ($400/year each) to obtain
    them.  VeriSign's fraud monitoring eventually figured out the mistake, but
    it took them six weeks after issuing the certificates.  Even so, no
    Microsoft software is capable of automatically obtaining the Certificate
    Revocation List (CRL) listing those two bogus certs, because there's no
    revocation infrastructure.  Oops.  Instead, Microsoft has to issue a patch
    that will use a local CRL plus enable CRL-checking in all their
    Authenticode-using programs.  So once again, it comes down to "warnings in
    the press."  Will Microsoft do the same thing every time a certificate
    needs to be revoked before its stated expiry date?
     >In the future it is likely that a higher level of
     >security will be possible in enterprise
     >configurations.  Ideally each software installation
     >would be referred to a central service for prior
    Something like a centralized service that can approve or decline the
    execution of every executable on every known client machine in the
    enterprise.  Something like, say, SecureEXE:
    Something like this is essentially powerless over buffer overrun exploits,
    scripting or macro viruses, interpreted executables like Java, or directly
    interpreted languages like Python, Perl, etc.  In short, something like
    this would only work on roughly half the worms/viruses out there.  The
    likely effect of this central service would be little more than to change
    the balance of how new worms and viruses are written.
    From: Steven Bass <sbassat_private>
    Subject: 802.11 Standard Security
    I think your analysis of the 802.11 flaw is flawed.  Yes, an analysis by a
    security expert would have probably caught this error and produced a better
    solution.  But this was not a closed process.
    The American standard processes, whether by IEEE, ANSI, ASTM, or one of the
    many industry fora, are essentially volunteer processes.  As an attendee at
    a number of ANSI and IEEE standards meetings, I can say that while they are
    difficult, often highly political, and frequently incomprehensible to new
    attendees, the people there are generally open to contributions from anyone
    interested in contributing.  My guess is that the people who implemented
    the WEP security were well-meaning people not versed in security; they did
    the best they could to develop a solution within the constraints they
    faced.  At the time, they were limited to 40-bit crypto for export.  They
    may have had proprietary solutions in the field which needed to remain
    compatible.  So they took their best shot and drew up something.
    While the standards are under development, many working documents are
    freely available (for example the 802.11 documents are at
    <http://grouper.ieee.org/groups/802/11/Documents/index.html>), so any
    cryptographer with interest could follow the process by reading the
    documents and provide feedback at no cost.
    When released, they do cost money, as that is a primary funding mechanism
    for IEEE and ANSI.  But this is a red herring; once the standard is
    released, it is largely too late to change things.
    While the standard committees are open to anyone, they are largely driven
    by corporate interests.  Corporation have both money and a vested interest
    in the outcome.  This has worked pretty well in the past, by forcing
    competing manufacturers, network system designers, and large corporate
    users to build consensus.
    The real question behind your comment is what is the best way to create
    standards.  As a volunteer process, if there are no voices representing a
    particular viewpoint, it isn't heard.
    Even if all standards in development were posted for free on the Web, it
    wouldn't help much.  802.11 was a many-year effort, at times a real mess
    trying to merge pre-existing solutions into a standard.  For many years it
    was considered to be a failure that would never be released.  For a long
    time after it was released many thought it doomed to niche status by one
    thing or another (Hiperlan, Bluetooth, or something else).
    And this was just one of dozens (if not hundreds) of standards that have
    been developed or are being developed for networking systems (and don't
    forget busses, disk drive protocols, content rights systems, computer
    architectures, Web protocols, etc.).  Since it is impossible to know which
    will win in the marketplace, and once one does it is too late to easily fix
    the security problems, that means security experts need to be part of EVERY
    potentially relevant standard effort.
    Don't blame the openness of the process, or the cost of the
    standard.  They're not the problem here.  There are simply too many
    different standards under development, and not enough people with the
    knowledge, interest, or time to analyze them all.
    From: Michael Rabin <rabinat_private>
    Subject: Ding-Rabin Provably Unbreakable Encryption
    This is a brief response to "Harvard's 'Uncrackable' Crypto."  Many experts
    who heard lectures and read the paper were enthusiastic. Some of the less
    informed reactions fit well into the following mold.  William Cruikshank,
    writing in 1790 about human physiology said (not that hyper encryption is
    as important as Harvey's work):  When Harvey discovered the circulation of
    the blood, his opponents first attempted to prove that he was mistaken; but
    finding this ground untenable, they then asserted that it was known long
    before...; when this failed they once more shifted their ground and said
    the discovery was of no use.
    Harvard Univ. or its public relations department had nothing to do with the
    publicity for hyper-encryption.
    Maurer proposed the bounded storage model.  However, he does not have a
    practical method which is provably unbreakable.  He has suggested putting
    us in touch with people to commercialize our work, but we are not following
    this now.
    That encryption is vitally important is evidenced by the hundreds of
    millions spent on encryption technology and the billions spent on
    code-breaking.  Once discovered, the provably secure encryption will be
    used sooner rather than later.
    The proposal to store the bit stream by bouncing it between satellites is
    infeasible because the mirroring method allows storage of about a second's
    worth of bit transmission, while the adversary must store several weeks or
    even years worth of the stream.
    Full answers to various questions is to be found in the site pointed to in
    my and Yan Zong Ding's web pages at Harvard DEAS.
    ** *** ***** ******* *********** *************
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    CRYPTO-GRAM is written by Bruce Schneier.  Schneier is founder and CTO of
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