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The first thing you should do is estimate the key length. While you may be able to do this using Kasiski examination, in this modern era of computers I very much recommend instead using the index of coindicence, which you can compute very easily, e.g. with this Python program: import sys msg = sys.stdin.read() # read ciphertext from standard input for ...

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First things first: Don't roll your own crypto. As for your current approach: This is basically a vigenere cipher which is inherently broken, provides not integrity protection and wouldn't even encrypt known / predictable bit positions (where the ASCII code is constant zero or one). As for an improved version: Use a well-known encryption algorithm (e.g. ...

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As long as the keys $K_i$ are only used once, this is semantically secure. To see it, observe that if $K_i$ is a uniformly random value in $\{0,1\}^{|M|}$ then so is $C_i = M \oplus K_i$.

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