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This news will not make Skype happy at all. A hacker by the name of Efim Bushmanov that calls himself a freelance researcher has announced that he has reverse engineered Skype and offered the source code up for download. Bushmanov says that he aims to make Skype open source and is looking for friends that can spend the "many hours" needed to completely reverse engineer the software.
The man claims that most of the hard things for the project are already done for versions 1.x/3.x/4.x of Skype. The hard parts that are complete include the rc4 and arithmetic compression. Bushmanov also offers a "unique chance" to look at the Skype internal protocol and encryption and notes that it uses AES and RSA encryption.
Apparently, the man offers a working "send message to Skype" code, but notes that it is based on the old Skype 1.4 protocol that is changed now. You can download the code if you want from the skype-open-source website. I wonder how Skype will respond to this.
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Skype protocol reverse engineered and source offered for download is written by Shane McGlaun & originally posted on SlashGear.
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