$treet Journal, August 22, 1997, p. A7A. Hackers' Paradise: Get Wealthy Legally By Cracking a Code Crypto-Logic Offers to Pay $1 Million to the Breaker Of Encryption for E-Mail By Rodney Ho A start-up company would like you to hack your way to $1 million. Crypto-Logic Corp. of Austin, Texas, claims to have created an encryption system for electronic mail so foolproof that it can't be broken. If someone can figure out a special encrypted e-mail message within a year, the company says it will pay a reward of $1 million. But wait. The technology Crypto-Logic is using for the contest hasn't exactly been foolproof. The three computers needed to create the contest's Web site unexpectedly scrambled data in the site last week, said David Neeley, vice president and chief operating officer. The breakdown forced him to backtrack from last week's announcement that the contest would begin last Friday. Instead, he spent several days attempting to fix the computers, but to no avail. On Monday, he had to get replacement computers. "I've got thousands of dollars worth of machinery that's not worth blowing up," he grouses. But he adds, "I regard this as my screw-up. In this world, there are no excuses." He finally got the contest running Wednesday, at www.ultimateprivacy.com. On the bright side, cryptologists agree that the decades-old encryption method that Crypto-Logic is claiming to use -- called a "one-time pad" -- is theoretically unbreakable. Each "pad" has a set of uniquely random digital symbols that are coded to the actual message. The recipient uses the same symbols to decrypt the message. The pads are used only once. To limit the possibility of leaks, Crypto-Logic Chairman Stan Spence is the only person who knows the message that was encrypted. The solution is kept in a NationsBank vault in Austin, Mr. Spence says. In addition, Mr. Neeley says the $1 million is backed by an insurance company he won't name. Several other companies have held similar contests, typically offering more modest sums. Jim Bidzos, president of RSA Data Security Inc. in Redwood City, Calif., says his company frequently holds break-the- code contests to test how tough certain encryption systems are. But he and other security experts are skeptical of Crypto-Logic's assertions. "Anyone who says their system is bulletproof is either a liar or stupid," says Winn Schwartau, a Largo, Fla., security expert. Mr. Neeley admits his integrity is on the line. "If I'm wrong," he notes, "we're out of business." [End]