Particle physics enters the encryption wars:

After 20 years of research, an encryption process is emerging that is considered unbreakable because it employs the mind-blowing laws of quantum physics.

This month, a small startup called MagiQ Technologies Inc. began selling what appears to be the first commercially available system that uses individual photons to transfer the numeric keys that are widely used to encode and read secret documents.

Photons, discrete particles of energy, are so sensitive that if anyone tries to spy on their travel from one point to another, their behavior will change, tipping off the sender and recipient and invalidating the stolen code.

"There are really no ways (of) cracking this code," said Lov Grover, a quantum computing researcher at Bell Laboratories who is not involved with MagiQ.

Called Navajo - a nod to the American Indian code specialists of World War II - MagiQ's system consists of 19-inch black boxes that generate and read the signals over a fiber-optic line.

MagiQ (pronounced "magic," with the "Q" for "quantum") expects that with a cost of $50,000 to $100,000, Navajo will appeal to banks, insurers, government agencies, pharmaceutical companies and other organizations that transmit sensitive information.

....So does the world's foremost code-making and code-breaking organization, the U.S. National Security Agency, worry about the spread of quantum encryption? Better yet, is the NSA using the technology itself? Like most things about the NSA, those answers remain secret.

MagiQ is seeking the government's approval to sell Navajo boxes overseas. Gelfond hopes officials have realized - after trying and failing to restrict encryption exports in the 1990s - that there's little point in trying to "put the genie back in the bottle" once encryption methods have been invented. After all, he said, researchers in China are known to have experimented with quantum encryption.

....In any incarnation, quantum encryption employs one of the defining discoveries of physics: Heisenberg's Uncertainty Principle, which says subatomic particles exist in multiple possible states at once, however hard as that may be to imagine, until something interacts with them.

When one Navajo box sends out a code key, it imparts certain measurable characteristics to photons that travel through the fiber-optic line. When the second Navajo box measures those characteristics, that mere act throws off other characteristics - but the Navajo boxes confer with each other after the transmission is complete and sort it all out. The boxes can be up to 70 miles apart, after which additional boxes are needed as relays. [AP]

What are the ramifications of unbreakable encryption? Mandatory back doors? How do individual privacy rights relate to the government's investigative needs?