Vernam Cipher (also known as the one-time pad (OTP)) is an encryption technique that cannot be cracked, but requires the use of a one-time pre-shared key the same size as, or longer than, the message being sent.

Suppose Alice wishes to send the message "HELLO" to Bob. Assume two pads of paper containing identical random sequences of letters were somehow previously produced and securely issued to both. Alice chooses the appropriate unused page from the pad.

The material on the selected sheet is the key for this message. Each letter from the pad will be combined in a predetermined way with one letter of the message. (It is common, but not required, to assign each letter a numerical value, e.g., "A" is 0, "B" is 1, and so on.)

In this example, the technique is to combine the key and the message using modular addition. The numerical values of corresponding message and key letters are added together, modulo 26. So, if key material begins with "XMCKL" and the message is "HELLO", then the coding would be done as follows:

      H       E       L       L       O  message   7 (H)   4 (E)  11 (L)  11 (L)  14 (O) message+ 23 (X)  12 (M)   2 (C)  10 (K)  11 (L) key= 30      16      13      21      25     message + key=  4 (E)  16 (Q)  13 (N)  21 (V)  25 (Z) (message + key) mod 26      E       Q       N       V       Z  → ciphertext

If a number is larger than 26, then the remainder after subtraction of 26 is taken in modular arithmetic fashion. This simply means that if the computations "go past" Z, the sequence starts again at A.

       E       Q       N       V       Z  ciphertext    4 (E)  16 (Q)  13 (N)  21 (V)  25 (Z) ciphertext-  23 (X)  12 (M)   2 (C)  10 (K)  11 (L) key= -19       4      11      11      14     ciphertext – key=   7 (H)   4 (E)  11 (L)  11 (L)  14 (O) ciphertext – key (mod 26)       H       E       L       L       O  → message

Similar to the above, if a number is negative then 26 is added to make the number zero or higher.