It has all the hallmarks of snakeoil.

After a bit of searching around, I found another article at the Sunday Times
(not noted for it's fact checking) and a company site. I'll include their
page
on the method below. It looks like typical snake oil - the description
includes
a number of errors which indicate a basic unfamiliarity with modern 
cryptography, and the usual grandiose claims of infallibility of their
system,
combined with claims of the weakness of current algorithms.

Bruce Schneier would have fun with this one.

Johnson seems quite a colorful character. Aside from crypto, he also
has interests in sewage treatment, image enhancement, intellectual
property protection, display technology, economic forcasting,
and genetic engineering. Several of these involve something he 
calls 'fractal modulation'.

There's nothing that screams "this doesn't work", but also nothing
to make me take it seriously. Among other things, they
seem to think they've invented perfect forward secrecy.

Peter Trei

Sunday times article:
http://www.sunday-times.co.uk/news/pages/sti/2000/02/13/stidordor03008.html

----------------------
>From e-larms' web page at http://www.e-larm.co.uk


E-Larm Corporation Limited is a subsidiary of the
Microbar Security Group which is, in turn, wholly owned
by Durand Technology Limited.

E-larm Corporation Limited is a fully-owned subsidiary
of Microbar Security Limited and is party to the joint
venture with Debden Security Printing, a subsidiary of
the Bank of England.  E-larm� uses Fractal
Modulation and Chaos to create a completely different
extremely secure and compact method for encrypting and
decrypting data for e-commerce and other purposes.

There is a high degree of dissatisfaction from
e-commerce users and strong concerns about security
that must be overcome in order to enable e-commerce to
develop in the way it deserves.

Present encryption methods:

Variations on a well-know theme with public and private
keys arranged so that an exhaustive search will crack
the code. The problem is that modern computing with its
enormous power can complete an exhaustive search given
time so that the traditional safeguard that the
information will be old and less sensitive by the time
it is cracked has gone away. In other words systems can
be broken and therefore hacker can enter. E-larm makes
this impossible. In the past encryption has always been
prone to eventual repeat patterns that give the game
away.  Random numbers are really pseudo random and are
large prime numbers.  However, these must repeat
eventually if the transmission is long enough or
frequent enough using the same encryption.  All current
e-commerce encryption is stationary. That is to say
that the algorithms and keys do not change during the
transmission just like the wartime Enigma machine.

The uniqueness of E-larm

A fresh approach to developing non-repeating chaotic
numbers protects against deciphering.

It is a non-stationary encryption approach. In other
words, E-Larm uses different keys and algorithms on a
random basis throughout the transmission. Or it is like
a warehouse full of Enigma machines which are used at
random and only for a few keystrokes each.

Secure opening communication system, a secret
handshake, to exchange keys. Or in other words to agree
which warehouse full of Enigma machines to use for this
particular transmission.

We must make it clear that the keys for e-larm are not
the same as for traditional encryption.

E-larm is so diverse in its choice of algorithms and
keys and because it uses chaos cannot be broken even if
its approach is known. An exhaustive search cannot
unlock chaotic encryption.

----------------------

> ----------
> From:         William Knowles[SMTP:[EMAIL PROTECTED]]
> Sent:         Friday, November 10, 2000 7:00 PM
> To:   [EMAIL PROTECTED]
> Subject:      Republic targeted for sale of 'unhackable' system 
> 
> Snakeoil?
> 
> [Smells like it. --Perry]
> 
> http://www.ireland.com/newspaper/finance/2000/1110/fin10.htm
> 
> Friday, November 10, 2000 
> 
> SECURITY/Jamie Smyth: A Guersey-based multimillionaire inventor, who
> claims to have developed the world's first "unhackable" communications
> security system, is seeking potential buyers in the Republic. Dr
> William Johnson, a tax exile with more than 100 registered patents to
> his name, has sent a negotiating team to the Republic to contact
> companies who may be interested in purchasing the licensing rights to
> the security system, E-Larm.
> 
[...]

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