Why are chips used in electronic identity cards?

Question

Why did Germany choose NXP's SmartMX chip in the new Electronic ID Card (see here) instead of having a more conventional solution, like an old credit-card-like approach?

In fact, the question is more general: Why is the chip solution considered the best approach for identity cards vs. magnetic bands, MRZ et al.?

FTR, I think that a much more cost-effective solution would be by having the cryptographic engine in the reader/writer and the card should be a rather dumb storage media which will store the encrypted data.

(Also, we all know that there are also solution to 'workaround' the chip's security features. See here)

What do you think?

Answer 1

Smartcards have chips so that the reader can do challenge response authentication. The chip is a black-box which can authenticate by correctly answering a cryptographic challenge.

If a dumb storage medium was used, it would be copyable.

Answer 2

In Serbia, we too have chips in ID cards, but they aren't mandatory.

I'm going to write a bit about what I found out here. I assume that at least some of that could apply to other users of electronic ID cards.

I'd say that first step is to have large amount of information. Smart cards can hold larger amount of information that magnetic cards (or at least I got that idea from somewhere).

Next interesting point is that because smart card itself is "active" you can make relatively easy upgrades without modifying entire infrastructure. For example here we added fully qualified certificates for electronic signatures into ID cards some time after they rolled out. With smart cards, he private doesn't leave the card itself, so it is more secure than other storage mediums. Magnetic strip cards can be copied and data from them removed.

Another interesting thing is that it is easier to hide information your government doesn't want you to know it's there in a smart card. For example, ID cards here have fields for apartment number and floor number as a part of the address, but officially government shouldn't have access to such information and those fields weren't supposed to be in ID cards.

I'd also say that smart card format itself is more accessible than magnetic card. Smart card readers are more common than magnetic card readers, so users who want to use their ID cards for signing documents, registering vehicles and so on could just buy a regular smart card reader instead of a more expensive proprietary one with encryption functionalities which may or may not be safe.

Also, smart cards can be used to encrypt data in Windows and for logging in (but I couldn't figure out how to do the second part). Users of smart ID cards could avoid having to obtain another smart card for those functions.