Industrial and military cryptography should follow the same basic rules, but what does make them different is:
Are there other fundamental differences that make military encryption safer?
Clearly there is a difference between military grade encryption and civilian encryption. One of them is that military grade encryption is for use strictly by the military! That's probably the main difference, although no one herein is qualified to answer definitively.
There is a common list floating on the Interweb showing the alleged contents of Suite A. Algorithms include:-
ACCORDION
BATON
CDL 1
CDL 2
FFC
FIREFLY
JOSEKI
KEESEE
MAYFLY
MEDLEY
SAVILLE
SHILLELAGH
WALBURN
WEASEL
Two alternatives face us. One, this is just a joke list or a feint put about by the security services as a means of disinformation. It's what I'd do. Two, it has some elements of truth. The latter seems more convincing in that it ties in with other independent evidence. Although the best lies are those that are partially true.
Looking at BATTON, FIREFLY and SAVILLE, they are old. SAVILLE is a pure stream cipher from the 1960s and used in the Vietnam police action. It is unlikely to be faster/more secure/better than AES (never mind hardware accelerated AES) and uses a 120 bit key loaded via a KYK-13 Electronic Transfer Device. I've seen one of those. That's decades old too. It's like a military USB key that doesn't fit on a necklace.
FIREFLY was used in STU-III secure phones from the 1980s. Newer ones use civilian Diffie-Hellman key exchange.
BATON may be an unbalanced Feistel network that only runs faster than a Dodo Clipper chip from the 1990s. Hardly impressive.
Reiterating, this could all be balderdash put about to keep us guessing. However it has the smell of truth when you consider the military obsession with secrecy. And a very good reason to keep it all secret would be that it's mainly rubbish by current civilian standards, e.g. Britain's nuclear deterrent powered by Windows for Submarines. If suite A has really been upgraded, it's probably the best kept secret in the world. But given that people like Snowden / Assange exist, and that many secrets have been released/leaked to the public, this seems unlikely.
There’s no difference except for marketing. Neither of the terms has a meaningful technical definition on which a substantial share of experts in the field can agree.
Historically there was a difference in permissible key length due to U. S. export restrictions but those stopped a long time ago except for a few countries that are under broader embargo (e. g. North Korea, Iran, Syria).
The main difference between industrial and military cryptography is the key-length, or difficulty in decryption in general.
Everybody should rely on Kerckhoffs's principle, which states:
A cryptosystem should be secure even if everything about the system, except the key, is public knowledge.
You should never rely on secret algorithms because it would need only one person (i.e. a spy) who can reveal the secret algorithm to the enemy.
In the past, the military often used Steganography to communicate in secret, but as far as we know this trend has come to an end by using reliable cryptography.
One option for today's military security may also be secure channels because they can establish a separate infrastructure that isn't available to the public, but even this isn't used in a large scale.
TL;DR
The term "military grade encryption" is often just thrown around in movies, but usually, there's no difference because in the end, everyone relies on Kerckhoffs's principle by using known cryptosystems with large keys.
As having some experience on military crypto, as Aleksander Rassasse said, everybody relies on Kerckhoffs's principle. Yes, everybody relies on.
However, there are some differences. Militaries still think that even we rely on the Kerckhoffs's principle, as a security measure, we will not release our cryptographic algorithms, Error-Correcting Codes, protocols, key distribution systems, etc, and the crypto devices to 3rd party investigation.
Instead, closed communities try to imitate the open community. That is; setting up groups that have different aims as algorithm designer group and analyzer group. The former group design and the latter require some time to analyze. The reason is simple; the path of wisdom is unique.
This is completely personal taught; (Also, I believe that NSA or other agencies, try to outsource some of their problems so that they can use the result in their problem)
As a consequence of this kind of restriction, fewer minds analyze and see the problems. Whereas, in industrial, at least somebody can buy the device and reverse engineer it, as in A5/1, and finally show that it is breakable.
Military actually benefit from these restrictions. As an example, when you listen over a radio channel, one cannot distinguish whether the signal just an open message+ECC or message+zip+ECC+encryption, etc.
One interesting example of fewer mind analyze is the SIMON cipher by NSA. Now, it is almost broken.
One interesting example is in OpenSSL, Dual_EC_DRBG. This is missed 7 years from the open community.
Conclusion; let them play their games, and let them play ours.
I was once part of a closed one.
The difference between military and civilian anything is that the military version must be usable by a poorly educated youngster who is stuck in a ditch with gunfire around him. On the other hand, military stuff is used by people who have been drilled to follow the rules exactly.
So military encryption must be designed to be set up and used easily by someone who is not incredibly smart but drilled to follow clear instructions. And the military can and will protect their physical hardware with men with guns, which protects them from certain attacks.
The main differences would be that the underlying mechanisms in which Suite A crypto functions is not known to the general civilian population. Whereas the mechanics and algorithms used in 'industrial' crypto are mostly available for anyone to inspect. For example check out GNU libgcrypt Another difference would be that one cipher would be guaranteed to not be decrypted.
my answer might be late to the party but I'd like to contribute. Depending on whom you ask, you will get different answers, some might even state that there is no difference, but we will look at what we know in order to determine whether such encryption exists, and if it does, if it's any good.
The NSA uses a suite of algorithms called "Suite A" (they actually use more suites, but this is the one appropriate for high-stakes military use), which are mentioned in spec sheets of military crypto processors used by Raytheon. Military encryption exists, and that's a fact, not an opinion. Here's where the subjective opinion starts flowing in. Are military encryption algorithms as safe, or perhaps, better than standard algorithms, such as AES?
I have noticed someone was finger-pointing the NSA for violating the Kerkchoff principle, but are they truly? Kirchoff's principle states that the security of a system should be based on the secrecy of the key, not the secrecy of the algorithm. Having this definition, we may look at one cipher that was at one point classified, and that is Skipjack. Skipjack was, for its time, a pretty decent algorithm, back when the NSA was even less experienced with cryptography than it is now. Skipjack, although it was secret, was not designed to have its security based on the secrecy of the system, thus, respecting the principle mentioned before.
We may now look at Suite A algorithms and ask ourselves if that is still the case. Most cryptographers will normally bash on anyone using secret algorithms, Jean Philippe Aumasson, Niels Ferguson, Bruce Schneier will ALL tell you not to use secret algorithms, but their arguments are based on either Kerkchoffs principle, or on the fact that by having a cipher made public, more people can look at it and analyze it.
Here's where the adversarial mindset comes in : the mentioned cryptographers assume that anyone capable of finding non-generic attacks on a cipher will also publish them, with the purpose of helping the designers of that particular cipher enhance it, but is that truly the case? If the NSA would publish Suite A tomorrow, and the Chinese secret services would start analyzing these algorithms, would they publish a paper regarding non-generic attacks in order to help the designers at NSA enhance the ciphers of suite A, and not take advantage? If the cryptographers at NSA were certain of the fact that AES(we'll come back to AES very soon) can withstand military attacks from the Chinese, would they not tell the military to only use AES? AES is an amazing algorithm and it's respected, but it's no secret that you get a better security margin if you use non-standard algorithms. Twofish has a better security margin than AES, and so does Serpent, AES is simply outperforming them, which is an important aspect in order to have good data traffic. In Modern Cryptographic Applications, William Easttom argues that the NSA is probably not publishing secret algorithms in order to avoid having adversaries analyze them. The NSA is also more than capable of analyzing the algorithms themselves in order to determine whether they are secure or not. There is a number of things that, when taken to account, point to one "conclusion" (until suite a is published and analyzed, we can't really call it a conclusion) : AES is just the standard, and those who know the story of how it came to be, know there are better algorithms. Also, if the largest employer of cryptographers in the world came to the conclusion that military cryptoprocessors should use both Suite A and Suite B algorithms, classified algorithms are probably safe, given you have enough brains to breed them.
Auguste Kerckhoffs said it all in his La Cryptographie Militaire (1881). David Kahn, speaking of Kerckhoffs in The Codebreakers, says that he:
...made the requirements that have come to be demanded of systems of military cryptography, requirements such as simplicity, reliability, rapidity, and so on. This clear recognition of the new order constitutes Kerckhoffs' first great contribution to cryptology.
Kerckhoffs revolutionized military telegraphy and set it apart from the rest.
Much more recently, Bruce Schneier made an interesting distinction between academic and military cryptography--and their courses of development:
"Academic cryptography is mostly based on Feistel's work in the mid-1970s at IBM: SP-networks and Feistel networks. Military cryptography started with rotor machines and then generalized into shift registers... I find it fascinating that the two different design paths are converging." [1]
What Mr. Schneier meant was that modern military cryptography developed out of rotor devices such as the Hagelin machines (for example, the M-209) which were replacements for earlier systems such as the M-94 cylinder. This cylinder and the M-138 strip ciphers saw extensive use during the 1930s and all of World War II, but they are seldom discussed today. Incredibly important traffic-- that of the Manhattan Project-- was encrypted with the M-94. What is the distinguishing feature of these systems? They are portable and lightweight.
Being lightweight was, and still is, extremely important for military cryptographic systems. The German Schlüsselgerät 41 (SG41) was superior to Engima, but it weighed about 30 pounds and was therefore too heavy to deploy for frontline use.
Modern military encryption often focuses on radio and satellite communications, but it depends on what country one is talking about. For some, it might just be a radio. Encrypted military radio systems tend to send traffic via some method of spread-spectrum transmission such as frequency hopping. This is sometimes done to prevent jamming (denial).
Authentication is extremely important; meta content is too. Plaintexts are usually highly structured, and acronyms are very common. The best encryption a country has in stock will probably be used for command and control by senior leaders. A lot is at stake.
The adversarial nature of cryptography, its essence, is clearly seen in military information security.
Compromise can have immediate catastrophic results. Military encryption is often done like half of a skill set, the other half being cryptanalysis. The viewpoint of the attacker can be developed, which is precious. In very general terms, military encryption today is surprisingly aware of the history of cryptography because of what one might encounter or need to use downrange--most of today's conflicts are asymmetrical. Classical cryptography is still being used by certain groups.
Military encryption usually takes place in a wider security context that is very substantial and includes strong physical security, careful key management, and counter-intelligence.
If we include the encryption methods of insurgents, paramilitaries, and other such actors under military encryption, then we see a reliance on classical methods such as codebooks. Serious people such as NVA Special Forces were known to use one-time pads and HF radio. In military matters what is often needed for immediate success is just something simple and dependable--and that applies to encryption too. Forward secrecy may not always be the biggest concern, especially at the squad/platoon/company levels, and it has to be fast and simple (not a VIC cipher, for example).
Ignoring marketing material that throws terms like "military grade" around without any real meaning...
The stuff the military are allowed to use is stronger than the stuff allowed to be sold commercially, and commercially there are restrictions on who you can sell different strengths of encryption to (EG only "friends" of the USA can buy equipment with certain grades of crypto in).
Encryption, authentication and integrity protection are one thing, how they are used is another. Encryption provides confidentiality, however attacker can still find out that you are communicating, when, how much and with whom. Probably only the military can afford to avoid analysis of the above, called traffic analysis, by constantly communicating at near-bandwidth volumes. This is one of the things that make encrypted military comms more secure, though not through encryption.
Military apply the concept “security through obscurity” and the key length is important but it is not always the case, for example:
The industry tends to use standards mainly AES (highly respected as a strong cipher and received many public analyses) especially when cryptography is not their core business.
While the military may have a hidden encryption protocol it really wouldn't make much sense to develop one, an open source system has the advantages that:
A)It already has implementations that you can base yours off of, making it cheaper to develop.
B)It has been tested by hundreds or even thousands of people, think how many companies and organizations have an interest in AES being secure and would check that it is, especially when it was in it's infancy.
C)You don't need to pay someone to develop it (cost is always a consideration).
While it is possible that a government has found some security exploit within modern encryption and developed one without that flaw it is likely that any exploit within the algorithm would have been found and published by now.
As mentioned by Aleksander Rassasse they likely just use large keys. The main advantage the military have is their experience in physical security (someone stealing the keys is always a risk) but no software can provide that.
