Cryptography is 'becoming less important' because of state-sponsored malware, according to one of the founding fathers of public-key encryption.

Turing award-winning cryptographer Adi Shamir (the S in RSA) said the whole basis of modern cryptography is under severe strain from attacks on security infrastructure such as the attack on app whitelisting firm Bit9 and problems with certificate authorities such as Turktrust, two recent examples of trends that have been going on for some years.

"I definitely believe cryptography is becoming less important," Shamir said. "Intelligence gathering services around the world are going through a phase shift. In the 19th century if you wanted to know the plans of Napoleon you need a CIA-type agent next to him. In the 20th century if you wanted to know the plans of Hitler during the Second World War you had listen to the communication and break the crypto, this was an NSA-type operation."

In the 21st century these approaches are becoming less useful, with hacking and Advanced Persistent Threat-type attacks featuring spear-phishing and custom malware becoming more important to spies, according to Shamir. The US is quadrupling the size of its cyber-combat unit for a reason, he said.

"In effect, even the most secure locations and most isolated computer systems have been penetrated over the last couple of years by a variety of APTs and other advanced attacks," Shamir said. "We should rethink the question of how we protect ourselves.

"Traditionally the security industry has thought about two lines of defence. The first line was to prevent the insertion of the APT in a computer systems with antivirus and other defences. The second was many companies trying to detect the activity of the APT once it's there. But history has shown us that the APT have survived both of these lines of defence and operate for many years."

Security needs be to rethought along the lines of how it might be possible to protect a system that might be infected by something that might remain undetected. Not everything is lost even if these circumstances, according to Shamir, who argued that any APT would be tightly constrained and unable to extract a large volume of data.

"I want the secret of the Coca-Cola company not to be kept in a tiny file of 1KB, which can be exfiltrated easily by an APT," Shamir said. "I want that file to be 1TB, which can not be exfiltrated. I want many other ideas to be exploited to prevent an APT from operating efficiently. It's a totally different way of thinking about the problem."

Ron Rivest, who teamed up with Shamir to develop the RSA encryption algorithm, asked what could stop the malware from compressing the target data. This led onto a discussion about disguising or obfuscating file names. "Let's hope that confuses the opponents more than it confuses us," Rivest said, to laughs from the audience.

Shamir made his comments during the cryptographers' panel session at the RSA Conference in San Francisco on Tuesday that also featured Rivest, ICANN's Whitfield Diffie and Stanford University's Dan Boneh. Diffie took issue with Shamir's argument that cryptography is becoming less important - arguing it's like saying that the net is less important in volleyball because the poles keep falling over. "The keys need to be well-supported at either end and that's where we're having the problems," Diffie said, arguing that cryptography remains essential.

Shamir responded: "In the Second World War if you had good crypto protecting your communication you were safe. Today with an APT sitting inside your most secure computer systems, using cryptography isn't going to give you much protection.

"It's very difficult to use cryptography in an effective way if you assume that an APT is watching over the computer system, watching everything that is being done, including the encryption and decryption process."

Shamir's remarks, the infosec equivalent of Paul McCartney saying guitar bands have had their day, can be found in a video recording of the RSA 13 cryptographers' panel session on YouTube here. The debate on whether or not we're moving towards a 'post-cryptography' world runs from between around the 10 and 22 minute marks. A discussion of quantum computing and quantum cryptography that runs for about 10 minutes from the 32 minute mark is also well worth watching.

"We shouldn't worry much about post-quantum cryptography but we should think about post-cryptography security," added Shamir. ®