The big news circulating through the Internet right now related to Skype is that someone may have reverse-engineered part of Skype’s encryption. Two posts of note:

• TechCrunch: Skype’s Innermost Security Layers Claimed To Be Reverse-Engineered
• Heise Security: Skype’s encryption procedure partly exposed

The comments on the TechCrunch article are particularly worth reading as a number of security-related folks have jumped into the debate – and the author of the reverse-engineered code has jumped in as well (or someone claiming to be him, anyway).

People have been trying to reverse-engineer Skype’s proprietary encryption algorithm’s for years… and there have been various presentations at conferences and much data out there. In this case now, a developer named Sean O’Neil has made code available that apparently will decrypt one layer of Skype’s encryption.

Now, the code does NOT give you access to actual Skype messages. O’Neil writes in the TechCrunch comments:

Decryption of the RC4 layer gives nothing other than the ability to check CRC-32 of the packets, mere detection of random-looking encrypted packets as Skype. Maybe some firewalls will be able to block it at last.

I interpret that to mean that this code could help differentiate Skype traffic from other network traffic. The value there is really only, as the author says, that tools could be able to block Skype traffic because it could be more easily identified.

O’Neil goes on to say he has reverse-engineered more of Skype’s protocols and will be laying it all out at the Chaos Communication Conference in Berlin in December. We’ll have to see what gets said then…