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Researchers Simplify Quantum Cryptography
Stony Stevenson writes "Quantum cryptography, the most secure method of transmitting data, has taken a step closer to mainstream viability with a technique that simplifies the distribution of keys. Researchers at NIST claim that the new 'quantum key distribution' method minimizes the required number of detectors, the most costly components in quantum crypto. Four single-photon detectors are usually required (these cost $20K to $50K each) to send and decode cryptography keys. In the new method, the researchers designed an optical component that reduces the required number of detectors to two. (The article mentions that in later refinements to the published work, they have reduced the requirement to one detector.) The researchers concede that their minimum-detector arrangement cuts transmission rates but point out that the system still works at broadband speeds."
The sexy part is that if there is a third party who tries to eavesdrop, the attempt will both fail and can be detected by the two communicating parties, and that the security of quantum cryptography has nothing to do with the lack of ability to factor large numbers, but is instead based on physical principles (quantum mechanics). Of course, the sensitivity to eavesdropping means that the system is probably vulnerable to a denial of service attack, depending on how the two communicating parties relate to eavesdropping.
Otherwise, you are perfectly correct. Many cryptographers, including Bruce Schneier, believe that quantum cryptography is a solution to the wrong problem. Nowadays, most probably, the least secure part of your communication system isn't in your key distribution scheme, but is somewhere else --- like in social engineering, or the computer systems which deal with the decrypted cleartext.
You also failed to mention that it is impossible to eavesdrop on the communication of the keys. This is probably the most important part because it can make one time pad encryption useful on computer networks. Without quantum cryptography, your one time pad is only as safe as how you send it (RSA encryption, chaos encryption, snail mail). Additionally, quantum cryptography can't be reverse engineered to find the algorithm for your one time pad.
This is all nice, but it is going to be tricky to implement it in the future. How do you send a photon from one computer to another a long distance away without using repeaters or branches? It will be a little tricky. Would this require a fiber optic connection between every computer that wants to communicate with quantum encryption? Or can you adjust the medium so that photons are transmitted and branched undisturbed?