ID-based encryption, or identity-based encryption (IBE), is an important primitive of ID-based cryptography. As such it is a type of public-key encryption in which the public key of a user is some unique information about the identity of the user (e.g. a user's email address). This means that a sender who has access to the public parameters of the system can encrypt a message using e.g. the text-value of the receiver's name or email address as a key. The receiver obtains its decryption key from a central authority, which needs to be trusted as it generates secret keys for every user.
ID-based encryption was proposed by Adi Shamir in 1984. He was however only able to give an instantiation of identity-based signatures. Identity-based encryption remained an open problem for many years. The pairing-based Boneh–Franklin scheme and Cocks's encryption scheme based on quadratic residues both solved the IBE problem in 2001.
Identity-based systems allow any party to generate a public key from a known identity value such as an ASCII string. A trusted third party, called the Private Key Generator (PKG), generates the corresponding private keys. To operate, the PKG first publishes a master public key, and retains the corresponding master private key (referred to as master key). Given the master public key, any party can compute a public key corresponding to the identity by combining the master public key with the identity value. To obtain a corresponding private key, the party authorized to use the identity ID contacts the PKG, which uses the master private key to generate the private key for identity ID.
As a result, parties may encrypt messages (or verify signatures) with no prior distribution of keys between individual participants. This is extremely useful in cases where pre-distribution of authenticated keys is inconvenient or infeasible due to technical restraints. However, to decrypt or sign messages, the authorized user must obtain the appropriate private key from the PKG. A caveat of this approach is that the PKG must be highly trusted, as it is capable of generating any user's private key and may therefore decrypt (or sign) messages without authorization. Because any user's private key can be generated through the use of the third party's secret, this system has inherent key escrow. A number of variant systems have been proposed which remove the escrow including certificate-based encryption,secure key issuing cryptography and certificateless cryptography.