Basic outline of current encryption scheme.

communications/mid/Encryption.md

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+#Encryption
+
+##Outline
+
+At the beginning of each connection, both nodes will establish a shared secret for encrypting the rest of the communications.
+
+To leak no information about the nodes, we will use only ephermal keys to establish the shared secret.
+
+##Specifics
+
+###Handshake
+
+After the connection was established, both nodes generate a secp256k1 keypair. They send the compressed 33byte public key to the other party. Both parties then calculate a common shared secret masterKey using the ECDH technique.
+
+Using the shared secret, they further derive further keys:
+
+`encryptionKey = SHA256(masterKey || 0)`
+
+`hmacKey = SHA256(masterKey || 1)`
+
+`iv1 = SHA256(masterKey || pubkey1)`
+
+`iv2 = SHA256(masterKey || pubkey2)`
+
+With index 1 being our pubkey and communications in our directions, and index 2 being the pubkey of the other party and communications in their direction respectively.
+
+###Encryption
+
+We use AES-128-CTR to encrypt all following communications. The encrypted data is then authenticated using a HMAC technique with the derived key.
+
+The total packet will then be
+
+`HMAC || N || PAYLOAD`
+
+with
+
+`N` being the total data sent so far, including this packet.