twocrypt provides a crypto tool with a deniable encryption option.
twocrypt (2c) is a tool for the ultra-paranoid, providing a traditional crypto, but also an option of deniable (subpoena-proof) encryption. It encrypts one or two files at once.
Each file can be recovered with its respective passphrase, but the presence of more than one file cannot be demonstrated, and the presence of this option alone should not be a credible argument for data hiding.
2c2 is a simple symmetric file encryption utility. It comes with an
interesting optional feature - it is capable to embed an additional file
within an encrypted data. This is done in a way that cannot be detected
without knowing the passphrase protecting the "hidden" file, even if the
password for the primary file is disclosed. The design is such that the
fact of using this method alone does not constitute a credible evidence of
data hiding (IANALBMSUTDO). This kind of encryption is also called
"subpoena-proof" or "deniable".
There is some previous work in this area. There are two popular approaches,
one is to throw away the encryption key, but store some information that
can be used to recover the key with a considerable computation effort
(several years or so). The concept seems to be risky for obvious reasons,
and is also impractical if the data has to remain accessible before the
projected cracking date.
The other approach is to have a number of containers protected with a number of passwords, of which some but not all might be encrypted data (rubberhose does that). I think it's needlessly complex, and usually applied to a storage such as a disk drive.
As such, 2c would be the first tool to implement this functionality in a
reasonable and practical fasion, at least I think so.
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