Like most people interested in cryptography, I have always been 
curious about the ciphers NSA uses to protect classified information 
-- the so-called Type 1 ciphers. I have never found any reliable 
information on these, outside of a few code names. Therefore I was 
surprised to find the following paragraph on the Navy's Infosec page 
which suggests that NSA uses 128-bit keys in newer systems and that 
older equipment that is still in use employs keys that are shorter.

http://infosec.navy.mil/TEXT/PRODUCTS/CRYPTO/kg-40.html

>The KG-40A is a mandatory modified version of the older KG-40, which 
>incorporates variable fill capability. The modification entails 
>replacement of a printed circuit board (motherboard) and the front 
>panel assembly. The KG-40A provides enhanced security using an 
>improved cryptographic algorithm and electronic key capability. 
>Because the KG-40A key is a standard 128-bit key, it can only be 
>keyed by the AN/CYZ-10 Data Transfer Device (DTD) or a KOI-18 Common 
>Fill Device (CFD). It cannot accept key from the KYK-13 Electronic 
>Transfer Device (ETD) or from the KYX-15 Net Control Device (NCD). 
>The KG-40A is an UNCLASSIFIED controlled cryptographic item (CCI) 
>when unkeyed and is interoperable with the KG-40. When the KG-40A is 
>keyed, classification equals that of the key installed.


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