> Aren't USB keys using a challenge and response system where the response is
> only valid when computed with the key. As such the response is accepted only
> once and is difficult, although possible, for a man in the middle steal and
> use before the "real" workstation does....

It depends what the device is and what the protocol is. Devices which
yield only a simple token can of course be intercepted just like a typed
password. A pocket crypto processor can be used for e.g. ssh or Kerberos
without the user needing to enter a password and without ever leaking
the key out of the back of the dongle. The protocol does a secure
exchange of session keys; a man-in-the-middle can only deny service.

I looked at the Crypto iButton (which can be mounted in a keyring USB
dongle) as a way of doing this. It also has the advantage of being
robust and useable in door systems, but Maxim/DalSemi appear to be
amazingly crap at supplying them.

Oh, and it's surprisingly easy to do a MITM attack if you are on the
same LAN as either client or server, but you don't even need the to
steal the initial authenticator; just hijack the connection once
established.

http://www.users.globalnet.co.uk/~testest/faq/howto5.html




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