Point-of-sale terminals that use magnetic-stripe cards and PIN codes have a fatal flaw: a malicious merchant can modify his card reader to capture and store all the information on the card as well as the PIN code in order to post additional (fake) transactions in the future. The next generation of point-of-sale terminals will use cards with a complete CPU, keyboard, and tiny display on the card. Devise a protocol for this system that malicious merchants cannot break.
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