Secure E-Commerce with Smart Cards - 24 Mar 2000

Reduce the risks

Your company might still consider smart cards to be a futuristic technology. To helpmake them a present reality, Windows 2000 (Win2K) will offer highly integrated support forsmart cards. In this article, I introduce you to smart cards, show you why they'reimportant, and explain how they work and how to start using them in Win2K. Specifically, Ishow you how to set up smart-card-based logon using Gemplus' GemSAFE smart card and GCR410smart card reader. But smart cards aren't perfect, so I also show you some of theirinherent risks.

Smart cards enable public key infrastructure (PKI), which in turn facilitatese-commerce. PKI lets you achieve a level of trust for electronic transactions that equalsor surpasses that of the paper- and signature-based world. PKI can provide messageintegrity, privacy, and nonrepudiation. You can't deny you sent a message if you've signedit with your digital certificate because your public key verifies your signature. If apublic key successfully verifies a signature, the only person who could have sent themessage is the person with the private key. (For more information about PKI and public andprivate keys, see "Related Articles in Windows NT Magazine," page 87.)The cornerstone of PKI security is that the private key associated with a digitalcertificate must remain private. An intruder can use a private key to easily forgetransactions.

How Smart Cards Work
Smart cards protect private keys, which are so crucial to PKI. Without smart cards,private keys reside on the local workstation, where they're vulnerable to intruder andphysical-access attacks. When you store your certificate on a smart card, the processorinside the smart card generates the corresponding private key directly and permanentlyinside the smart card. The smart card processes any information that you need to encryptby using your private key.

This procedure might sound impractical if you need to encrypt and email a file ofseveral megabytes—how can a smart card's relatively slow resources accomplish thatencryption? Because, in keeping with PKI's strategy, you don't encrypt actual data withprivate and public keys. Instead, the system generates a much faster symmetric sessionkey to encrypt the file. The system sends the session key and the file, which the smartcard first encrypts with the private key. The recipient decrypts the session key with yourcertificate's public key, then decrypts the data. This way, you're pushing a fairly smallamount of data through the smart card.

Smart cards also let you take your private key with you. If you move from oneworkstation to another without a smart card, you might not have access to yourcertificate, depending on the PKI software you're using. With a smart card, however, youcan go to any system that has a smart-card reader and log on, initiate transactions, signand encrypt email, and so on. Eventually, when truly public PKI exists, you might performthe same actions at Internet kiosks in an airport. By sequestering the private key withinthe smart card, you sidestep many risks. In "Protect Your Passwords," October1998, I described the many ways to steal Windows NT passwords that are stored on the localsystem. As intruders turn their attention to PKI, I anticipate similar incidents ofintruders stealing locally stored private keys.

Smart cards also reduce password risks. Users often neglect to create qualitypasswords; therefore, intruders can easily guess those passwords. Passwords are alsovulnerable to network eavesdropping and intruder programs. Smart cards provide muchstronger two-factor authentication: The user must physically have the smart card and mustknow the card's personal identification number (PIN). Even when a user misplaces the smartcard, an intruder has only a few chances to guess the correct PIN before the smart cardpermanently locks itself. As soon as the user reports the lost card, the PKI software canrevoke the certificate and render it invalid even if the intruder discovers the PIN.

Smart cards are tamper-resistant—you can't cut them open and physically extractthe private key, and you can't copy them like their magnetic-strip forebears.Additionally, smart cards are human-friendly: We're conditioned to trust and carefullyhandle credit cards and automated teller machine (ATM) cards, and we're accustomed tousing a PIN. User acceptance of smart cards is crucial to making universal PKI a reality.(For more information about the advantages—and disadvantages—of smart cards, seethe sidebar "Smart Cards or Dumb Cards?")

NT doesn't offer built-in smart card support, but you can add the support with productssuch as GemSAFE. After you install the product, you can use the smart card for secureemailing and Web browsing. Also, applications that support PKI standards can then usesmart cards for encryption or digital signatures. For example, Microsoft Office 2000 letsyou digitally sign Microsoft Word macros, and Adobe Acrobat 4.0 supports digitalsignatures. Win2K embraces PKI and smart cards at the OS and directory levels, thusfacilitating universal usage throughout the system. With Win2K, you can use smart cardsfor logon, email encryption, on-disk file encryption, Web access, and more.

Setting Up Smart Cards
Before you can use smart cards, you need a PKI, which Win2K provides with CertificateServer and Active Directory (AD). You have a bewildering array of options for how you setup PKI, depending on whether you'll host your own Certificate Authority (CA), outsource itto a provider such as VeriSign, or use a combination of the two.

In this article, I describe the simplest scenario you can implement—one computerserving as the AD domain controller, Certificate Server installed on an enterprise rootCA, and one smart card reader. A root CA is the highest in the trust hierarchy. Anenterprise CA means that the certificate server will use AD as its data store and thusoffer you a host of certificate management features. A standalone CA, which uses a localdatabase instead of AD, is what public Web servers typically use to issue certificates toInternet users.

After you install Win2K as a domain controller running DNS and Microsoft InternetInformation Server (IIS), you must install Certificate Server. Go to the Add/RemoveWindows Components applet in Control Panel, and select Certificate Services. InstallCertificate Server as a root enterprise CA. Other than specifying the name, you can usethe defaults on the subsequent dialog boxes. Next, you need to define which types ofcertificates your new CA can issue. You can use certificates for many purposes, includingvalidating Web servers, encrypting files with Encrypting File System (EFS), and securingemail. A certificate template—a management feature of enterprise CAs—definesvalid uses for a particular certificate.

Screen 1shows that I've added templates to my example CA and that I'm about to add the SmartcardLogon template. (You access these templates through the Certificate Authority MicrosoftManagement Console (MMC) snapin, which is available after you configure CertificateServer.) As their name suggests, Smartcard Logon certificates are limited to logon;Smartcard User certificates let you use one smart card for logging on and signing email.You must also add the Enrollment Agent template, which you need if you want to create newcertificates. You now have a PKI that can authenticate users via smart cards.

Your next step is to install the GCR410 smart card reader, which is a simple stepthanks to Plug and Play (PnP). Shut down the system, then connect the reader's two cablesto the computer. The PS/2 cable is a wedge connector that inserts between the PS/2 portand the keyboard or mouse cable. The reader draws power from the PS/2 port. The serialcable, which plugs into a spare serial port, establishes communication between the systemand the reader. When you start up your system, Win2K automatically detects the newreader—a welcome banner now prompts you to log on with a smart card or password, as Screen 2,page 87 shows.

Because smart card enrollment is a sensitive administrative function such as assigninguser IDs and passwords, you need to limit this capability to specific users andworkstations. Consequently, your next step is to enable one system as a smart cardcertificate enrollment workstation. First, request an Enrollment Agent certificate for theadministrator who will enroll users with smart cards (i.e., assign smart cards to users).When the administrator requests smart card certificates for new users, Win2K signs therequest with this Enrollment Agent certificate. Next, open the MMC snap-in Certificates.This MMC snap-in lets you manage certificates associated with your user account andrequest new ones. Request a new Enrollment Agent certificate, provide a friendly name, andclick Install.

The preceding steps are necessary only for initial setup. You'll repeat the remainingsteps for each user who needs a smart card. (In this article's example of only onecomputer, the user will need the right to log on locally to this server, by being a memberof the Server Operators group, for example.)

You can now request smart card certificates on behalf of other users. Select anexisting user account or create a new one. Open Microsoft Internet Explorer (IE), andenter your CA's server name (e.g., b1) followed by /CertSrv, as the URL in Screen 3shows. Request a certificate, then specify an advanced request on the next screen. On thefollowing screen, select Request a certificate for a smart card on behalf of anotheruser using the Smart Card Enrollment Station. Screen 4shows Certificate Server's final user enrollment screen. Select the Certificate Template(i.e., Smartcard User or Smartcard Logon). You can also specify which CA to use, althoughthis field defaults to the CA you've installed. You can specify the Cryptographic ServiceProvider (CSP) to use with this certificate. A CSP provides basic cryptographic servicesto the OS and applications. A smart-card-specific CSP uses the smart card to fulfillrequests for the services that involve the private key. Screen 4 shows the GemSAFE as theselected CSP. You can also specify the Enrollment Agent certificate that will sign thisrequest. Use the Enrollment Agent certificate you created earlier. Finally, you need tospecify the user for whom you're requesting this certificate, then click Enroll. Thesystem will prompt you to insert the smart card into the reader and enter its PIN.Certificate Server will display a page in your browser informing you that the operationwas successful. You can then view the certificate on the smart card or enroll anotheruser.

Now you're ready to log on using the smart card. First, log off the system and reinsertthe card. The reader notifies the system that you've inserted a card, and the system asksyou for the PIN. Enter the PIN, and your portion of the logon is complete. Win2K sends thePIN to the smart card for authentication. Then, the PIN performs cryptographic functionsthat Win2K requests (e.g., Win2K asks the smart card to sign a logon request).

Microsoft facilitated an Internet Engineering Task Force (IETF) proposal called PKINITto extend the Kerberos version 5 (V5) authentication protocol to support public-key- andprivate-key-based authentication in addition to Kerberos' shared secret symmetric keymethod. Consequently, the workstation sends the logon request to a domain controller via aKerberos Authentication Services (AS) request. The Kerberos Key Distribution Center (KDC)running on the domain controller verifies the request by using your certificate's publickey, which the CA publishes. If everything checks out, Kerberos grants a ticket and youcan log on. If a user loses his or her smart card, you simply open the certificateServices MMC snap-in, select the certificate under Issued Certificates, revoke it, publishthe updated certificate revocation list (CRL), and issue a new smart card to the user. Ifsomeone tries to log on with the now invalid smart card, Win2K will refuse the logon.

Only Time Will Tell
The simplest-case scenario of implementing smart-card-based logon, which this articledescribes, is fairly easy. Ideally, a company with Win2K Professional (Win2K Pro)workstations, a spare serial port, and a CA hierarchy in place could implement smart cardlogon by simply plugging a reader into each workstation and issuing a smart card to eachuser.

However, the real world requires much more planning. Smart card deployment is reallyPKI deployment, which, according to the media, is fraught with complication andcomplexity. Win2K, with its PKI support at the desktop and directory levels, promises toprovide a platform for the interoperability and integration necessary to make PKI takeoff.

I hope Microsoft releases a quality, usable OS that catches on quickly. If Win2K beta 3is any indication, Microsoft might actually pull it off. When I implemented smart cardsbased on the procedures I outline in this article, everything worked the first time. Ifapplication vendors take advantage of Win2K's directory and public-key services, PKI couldbecome a reality much sooner for everyone. And if manufacturers start building smart cardreaders into the PC, deployment costs will drop even lower and accelerate the move tosmart-card-based PKI. Only time will tell.