As part of my position at Aladdin, I reviewed the security of the Simple Pairing Protocol of the new Bluetooth specification, version 2.1. On the one hand, I found that there are significant improvements to the pairing protocol: standard cryptographic primitives are used, and the link key is well protected since it is derived from a Diffie-Hellman key exchange (carried out in an Elliptic curve group, for greater efficiency). However, I also found a huge vulnerability in the pairing mode that is based on passkey entry (i.e., the mode where a password is used in the pairing procedure).
There are actually two attacks. In the first, an eavesdropping attacker can learn the password in real time, irrespective of its length. This is not a problem if a different password is used every time. Note that this "should" be the case if the user types a password into two devices, like a laptop and cellphone. However, often a user will use the same password every time; in such a case, the pairing procedure becomes vulnerable. In addition to the above, devices without an interface for typing in a password have a fixed password (this password can be changed from the default, but in general is fixed). In such a case, an eavesdropper can learn the password and then pair itself with the device. Needless to say, this is a very serious vulnerability. In the second attack, an attacker who finds (or steals) a password-protected device (with a fixed password) can interact with the device a small number of times and fully learn the password, thereby enabling it to pair with it. Specifically, if the device has a 6 digit password, it suffices to attempt login approximately 10 times. In contrast, a secure password protocol would require the attacker to try approximately 500,000 times! Once again, this shows a serious vulnerability in the protocol.
I will be presenting these attacks at the Black Hat USA 2008 conference in Las Vegas this coming August; see more details here. In addition to describing the attacks, I will talk about what can be done until the protocols are fixed, and how to fix them. I look forward to seeing you there!