Diffie and Hellman describe a means for two parties to agree upon a shared secret in such a way that the secret will be unavailable to eavesdroppers. This secret may then be converted into cryptographic keying material for other (symmetric) algorithms. A large number of minor variants of this process exist. See RFC 2631 Diffie-Hellman Key Agreement Method for more details.

In 1976, Diffie and Hellman were the first to introduce the notion of public key cryptography, requiring a system allowing the exchange of secret keys over non-secure channels. The Diffie-Hellman algorithm is used for key exchange between two parties communicating with each other, it cannot be used for encrypting and decrypting messages, or digital signature.

Diffie and Hellman sought to address the issue of having to exchange keys via courier and other unsecure means. Their efforts were the FIRST asymmetric key agreement algorithm. Since the Diffie-Hellman algorithm cannot be used for encrypting and decrypting it cannot provide confidentiality nor integrity. This algorithm also does not provide for digital signature functionality and thus non-repudiation is not a choice.

NOTE: The DH algorithm is susceptible to man-in-the-middle attacks.

KEY AGREEMENT VERSUS KEY EXCHANGE

A key exchange can be done multiple way. It can be done in person, I can generate a key and then encrypt the key to get it securely to you by encrypting it with your public key. A Key Agreement protocol is done over a public medium such as the internet using a mathematical formula to come out with a common value on both sides of the communication link, without the ennemy being able to know what the common agreement is.

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Reference(s) used for this question:

Shon Harris, CISSP All In One (AIO), 6th edition . Chapter 7, Cryptography, Page 812.

http://en.wikipedia.org/wiki/Diffie%E2%80%93Hellman_key_exchange

http://www.google.com/patents?vid=4200770