After launching a pre-alpha client back in the early part of October, Bittorrent has returned with a better explanation on how this system works. Unlike other chat clients like AIM, ICQ and Skype, BitTorrent Chat takes a decentralized approach, meaning there's no central server that messages pass through. This service doesn't require user names either, but rather depends on a process called public-key cryptography.
BitTorrent's Abe Goldoor explains that there are no usernames as seen with other chat clients, and you aren't required to log in because there's no central server. Instead, a user's identity is a cryptographic key pair. To everyone on the BitTorrent Chat network at large, you ARE your public key. That means anyone can use BitTorrent chat anonymously: users aren't required to give their personal information. The only way to communicate is to exchange public keys.
"Using public key encryption provides us with a number of benefits," Goldoor adds. "The most obvious is the ability to encrypt messages to your sender using your private key and their public key. But in public key encryption, if someone gains access to your private key, all of your past (and future) messages could be decrypted and read. In Chat, we are implementing forward secrecy. Every time you begin a conversation with one of your contacts, a temporary encryption key will be generated. Using each of your keypairs, this key will be generated for this one conversation and that conversation only, and then deleted forever."
Just like BitTorrent and µTorrent, Chat uses a distributed hash table (DHT) to find IP addresses. He explains DHT as a "web of peers cooperating." While it may sound less secure having your IP address floating around in a "cloud," this DHT protocol supports encryption, promising that users will find each other securely and privately.
"With other chat tools, messages are sent through a central server, unencrypted as it passes through and stored before being re-encrypted and sent to its final destination," a BitTorrent rep said. "Our key innovation is to build a tool for communications that does not need servers. A way for two people to connect directly with the threat of their privacy being violated."
BitTorrent Chat is still in alpha. To get into the program, head here.