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One of the key benefits of smart cards is the ability for some cards to support on board cryptography. For more information on cryptography please read "Applied Cryptography" by Bruce Schneier.
Cryptographic smart cards open up a whole new realm in information security because it now allows a secure place for storage of keys and keyrings. By doing the actual cryptography on the card, the keys never have to leave their storage place. This gives the card holder a secure way of storing keys especially if the key pair was generated on the card. I will briefly describe what is necessary for using smart cards with cryptography.

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