It creates an encrypted data packet, called a ticket, which securely identifies the user. To make a purchase, you generate the ticket during a series of coded messages you exchange with a Kerberos server, which sits between your computer system and the one you are communicating with. These latter two systems share a secret key with the Kerberos server to protect information from prying eyes and to assure that your data has not been altered during the transmission. But this technology has a potentially weak link: Breach the server, and the watchdog rolls over and plays dead. An alternative to private-key cryptography is a public-key system that directly connects consumers and merchants. Businesses need two keys in public-key encryption: one to encrypt, the other to decrypt the message. Everyone who expects to receive a message publishes a key. To send digital cash to someone, you look up the public key and use the algorithm to encrypt the payment. The recipient then uses the private half of the key pair for decryption. Although encryption fortifies our electronic transaction against thieves, there is a cost: The processing overhead of encryption/decryption makes high-volume, low-volume payments prohibitively expensive. Processing time for a reasonably safe digital signature conspires against keeping costs per transaction low. Depending on key length, an average machine can only sign between twenty and fifty messages per second. Decryption is faster. One way to factor out the overhead is to use a trustee organization, one that collects batches of small transaction before passing them on to the credit-card organization for processing. First Virtual, an Internet-based banking organization, relies on this approach. Consumers register their credit cards with First Virtual over the phone to eliminate security risks, and from then on, they uses personal identification numbers (PINs) to make purchases.
