Skype is the undisputed leader in VoIP services both in quality and security. For years, hackers had been working hard to crack the strong Encryption Skype Protocol uses to Obfuscate its voice packets.
Encryption was so good that almost no one has been able to reverse engineer it out of the numerous Skype binaries. Those who claimed to have actually get through, failed to release it publicly. It was all shadowed until someone released the complete Obfuscation algorithm to the web in Plain C code.
The complete source code is available at http://cryptolib.com/ciphers/skype . On carefully analyzing the code, one can come to the conclusion that the greatest secret of Skype communication protocol, is in obfuscated Skype RC4 key expansion algorithm.
The leak actually happened a couple of months ago. Within few weeks of the leak, the code was being used by hackers & spammers. A better thing was to make the algorithm available to IT security Gurus as publication will help the IT security community help secure Skype better.
There is plenty of good cryptography in Skype. Most of it is implemented properly too. There are seven types of communication encryption in Skype: its servers use AES-256, the supernodes and clients use three types of RC4 encryption – the old TCP RC4, the old UDP RC4 and the new DH-384 based TCP RC4, while the clients also use AES-256 on top of RC4.
I tried to analyze the code, trust me its really complicated, really rocket science of Cryptography.