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You are what you know
by Paul Curzon, Queen Mary University of London
"Carter headed into the trees, his hat pulled low. Up ahead was a dark figure, standing in the shadow of a tree. As he drew close, Carter gave the agreed code phrase confirming he was the new agent: "Could I borrow a match?" The dark figure, stepped away from the tree, but rather than completing the exchange as Carter expected, he pulled a silenced gun. Before Carter could react, he heard the quiet spit of the gun and felt an excruciating pain in his chest. A moment later he was dead. Felix put the gun away, and quickly dragged the body into the bushes out of sight. He then went back to waiting. Soon another figure approached, but from the other direction. This time it was Felix who gave the pass phrase, which he now knew. "Could I borrow a match?" The new figure confidently responded, "Doesn't everyone use a lighter these days?" Felix hadn't known what he would say, but was happy to assume this was Carter's real contact. He was in. "Hello. I'm Carter." ...
The trouble with using spy novel style passphrases to prove who you are is you still have to trust the other person. If they might have nefarious intentions, you want to prove who you are without giving anything else away. You certainly don't want them to be able to take the information you give and use it to pretend to be you. Unfortunately, the above story is pretty much how passwords work, and why attacks like phishing, where someone sends emails pretending to be from your bank, are such a problem.
The story outlines the essential problem faced by all authentication systems trying to prove who someone is or that they possess some secret information. You give up the secret in the process to anyone there to hear. Security protocols somehow need ways one agent can prove to another who they are in a way that no one can masquerade as them in future. Creating a secure authentication system is harder than you might think! To do it well takes serious skill. What you don't do is just send a password!
A simple solution for some situations is used by banks. Rather than ask you for a whole account number, they ask you for a random set of its digits: perhaps, the third, fifth and eighth digit one time, but completely different ones the next. Though they have learnt some of the secret, anyone listening in can't masquerade as you as they will be asked for different digits when they do. Take this idea to an extreme and you get the "Zero Knowledge Proof", where none of the secret is given up: possibly one of the cleverest ideas of computer science.