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This is over my head, no question.

It'd be really cool if someone could ELI5 how such an encoding method could be setup without first sharing something analogous to private keys or one-time pads.

Note that the described scheme relies on a key exchange protocol (such as Diffie-Hellman). Remember that a key exchange protocol allows two parties to agree on a shared key; the key will be secret even in the presence of a passive eavesdropper who can observe the messages sent during the key exchange. In that respect, the fact that the two parties can communicate without having first shared a secret key is no more surprising than the fact that a key exchange protocols exists. The difficulty tackled by the paper is to "embed" the key exchange messages in the ciphertexts of the "innocent-looking" conversation. It is true that doing this embedding would be much easier if both parties had a pre-established secret, but the main result of this paper is to show how to do the embedding without a pre-established secret.

OK, thanks.

That last part is what boggled my mind. I'll read it again.

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