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Microsoft Drops Aging Encryption Schemes
christchurch wrote to mention an Eweek column about Microsoft's decision to stop using DES, MD4, and MD5 for encryption in Vista. From the article: "All three algorithms show signs of 'extreme weakness' and have been banned, Howard said. Microsoft is recommending using the Secure Hash Algorithm (SHA)256 encryption algorithm and AES (Advanced Encryption Standard) cipher instead, he said. The change is part of a semi-yearly update to Microsoft's Secure Development Lifecycle policies by engineers within Microsoft's Security Business & Technology Unit."
Well, it is true that they're hashes, not encryption methods but they can be used in a quasi-encryption manner. In particular, when it comes to hashing passwords to store an "encrypted" password, it is to a large extent the same as trying to break a known encrypted document where the key is the password. In fact, that's exactly how older unices store passwords, DES encrypting a blank document with the password as a key. So while it's true that MD5 isn't an encryption method, for the purposes of password authentication is it practically identical.
I thought that there was a limit of encryption and everything above ...bits was banned from exporting
That has changed. Back in the days of Windows NT 4, cryptographic algorithms were classified as munitions under ITAR. In the late 90s the law was changed, removing this classification. These days, there are still some export controls on crypto, but it's fairly easy to get a permit to export anything that uses a standard, well-known algorithm, pretty much independent of key size.
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" That doesn't sound right to me. The whole point of keypair encryption is that anyone with the public key can encrypt, but only the people with the private key can decrypt."
Not quite.
Whilst it is true that any data encrypted with a public key can be decrypted only with a private key, the converse is also true. Any data encrypted with a private key can be decrypted only with the public key. This means that whoever encrypted it must have had access to the private key and thus it gives confidence in where it originated.
It does not provide any confidentiality - but it's not supposed to, it is supposed to provide Integrity and message origin authentication.
This is the corner stone of digital signatures.