Here's an excerpt of what I said:
What the authors of the DSS were thinking was that PCI compliant merchants would implement cold war-esque missile silo techniques in which two military officers would each place a physical key into a control console and punch in their portion of the launch code sequence. This is technically possible to do with schemes like Adi Shamir's key splitting techniques. However, it rarely makes sense to do so.Here's an excerpt of what Bruce said:
Consider an automated e-commerce system. The notion of automation means it works on its own, without human interaction. If that e-commerce system needs to process or store credit card numbers, it will need to encrypt and decrypt them as transactions happen. In order to do those cryptographic functions, the software must have access to the encryption key. It makes no sense for the software to only have part of the key or to rely on a pair of humans to provide it a copy of the key. That defeats the point of automation.
If the pieces of the key have to be put together for each transaction, then a human would have to be involved with each transaction-- definitely not worth the expense! Not to mention an exploit of a vulnerability in the software could result in malicious software keeping a copy of the full key once it's unlocked anyway (because it's the software that does the crypto functions, not 2 people doing crypto in their heads or on pen and paper!).
If a pair of humans are only involved with the initial unlocking of the key, then the software gets a full copy of the key anyway. Any exploit of a vulnerability in the software could potentially read the key, because the key is in its running memory. So, on the one hand, there is no requirement for humans to be involved with each interaction, thus the e-commerce system can operate more cheaply than, say, a phone-order system or a brick-and-mortar retailer. However, each restart of the application software requires a set of 2 humans to be involved with getting the system back and online. Imagine the ideal low-overhead e-commerce retailer planning vacation schedules for its minimal staff around this PCI requirement! PCI essentially dictates that more staff must be hired! Or, that support staff that otherwise would NOT have access to a portion of the key (because they take level 1 calls or work in a different group) now must be trusted with a portion of it. More hands involved means more opportunity for collusion, which increases the risk by increasing the likelihood of an incident, which is NOT what the PCI folks are trying to accomplish!
The difference between a cold war missile silo and an e-commerce software application is the number of "secure" transactions each must have. Missile silos do not launch missiles at the rate of several hundred to several thousand an hour, but good e-commerce applications can take that many credit cards. When there are few (albeit more important) transactions like entering launch codes, it makes sense to require the attention of a couple different people.
So splitting the key such that an e-commerce software application cannot have the full key is stupid.
Let's take a concrete example: credit card databases associated with websites. Those databases are not encrypted because it doesn't make any sense. The whole point of storing credit card numbers on a website is so it's accessible -- so each time I buy something, I don't have to type it in again. The website needs to dynamically query the database and retrieve the numbers, millions of times a day. If the database were encrypted, the website would need the key. But if the key were on the same network as the data, what would be the point of encrypting it? Access to the website equals access to the database in either case. Security is achieved by good access control on the website and database, not by encrypting the data.It's nice to be validated from time to time, especially from the best.