When my wife and I started to plan our wedding, we inevitably turned to the question of rings, and it was only a matter of time before we came to the idea of rings with little wheels on them that could be used as crypto devices, in the manner of super-duper Captain Midnight Decoder Badges.
So we asked Bruce Schneier for some advice and he suggested that we make each ring with one static band and two rotating ones, each inscribed with the alphabet. The first wheel has dots on the letters, alternating above, none, below. The second wheel has the repeating sequence of above, above, none, none, below, below. The third wheel has the repeating sequence of above, above, above, none, none, none, below, below, below (it sounds confusing, but you can see a chart here).
Now it's time that we turn to the Internet with a challenge: given these two matching rings, what crypto applications can you come up with? Could you use them to scramble passwords (possibly hashed with a key)? How about encoding messages for secret transmission? What additional common apparatus (say, different-sized coins) could you use to generate initialization vectors and increase the system's security?
This is an open competition to be judged by Bruce "Applied Cryptography" Schneier and me — the winner gets a copy of Little Brother signed by both of us. Post your submissions to the comments or send them to firstname.lastname@example.org before Oct 1, 2008.