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A secret key generation scheme is proposed for generating keys to be used for one-time pad encryption. This type of encryption is suitable for e.g., short packet communication in distributed inference in IoT. The scheme exploits the phase of the channel fading coefficient in a Rayleigh fading channel to extract highly correlated key bits at two legitimate parties. Compared to other existing methods, the proposed scheme trades off higher bit error probabilities in the keys for lower error correction communication requirements. The bit error of generated keys is characterized via an approximate upper bound, which is shown to be fairly tight for reasonable signal-to-noise ratios.
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