After the initial set of attacks on MD5 and SHA-1, NIST organized a series of conferences on hash function design. I was lucky enough to be able to attend the first one, and had a great time. This was the place where the suggestion of a competition in the style of the AES process to replace SHA-1 and SHA-2 was first proposed (to wide approval). This has resulted in over 60 submissions to the SHA-3 contest, of which 14 have been brought into the second round.
Of the second round contenders, I think Skein is the best choice for becoming SHA-3, and want to explain why I think so.
First, some backstory which explains a bit about my philosophy of security, which will help explain my reasoning behind supporting Skein versus the other candidates.
In the AES contest, there were 15 submissions with the second round candidates being Rijndael, Twofish, Serpent MARS, and RC6. Of these, I was strongly rooting for Serpent and against Twofish. MARS and RC6 both seemed unlikely to win due to the use of multiplications, which greatly complicate hardware implementations, and in the case of RC6, data-dependent rotations, which caused horrible performance on non-x86 processors, so it seemed clear to me at the time the winner would be one of Rijndael, Serpent, or Twofish - and in fact, RC6 and MARS did come in the bottom of the poll held at the second AES conference.
My concern with Twofish was that the design, which incorporates a couple of kitchen sinks worth of design ideas including PHTs, MDS codes, and key-generated sboxes made it too difficult to analyze properly. This is not to say that Twofish is insecure; to my knowledge no serious attacks on it has been found, and I certainly do not claim to have one. My concern (then and now) is that Twofish is too complicated for me to feel it is reasonable to have any confidence that the lack of attacks is due to the strength of the algorithm, rather than simply there are too many interacting pieces for anyone to wrap their head around it sufficiently to find the attacks that are possible.
In contrast, Serpent has a SP-network structure that iterates a simple round function 32 times. This is both very conservative (32 rounds is twice the number needed to prevent the best known attacks) and very simple (thus making it easy to analyze and implement). Serpent's key schedule is also the simplest of all the AES candidates, except for perhaps RC6's, and largely reuses components of the cipher. Its treatment of keys of different length is uniform, unlike Rijndael or Twofish - and in fact, it turns out that Rijndael's different key schedules have completely different security properties, so that AES with a 256 bit key is actually weaker than AES with a 128 bit key against certain attacks, even though AES-256 actually uses 4 more rounds than AES-128.
And with DJB's finding that table lookups with key or data dependent values are vulnerable to timing attacks, it seems that of the finalists, Serpent is the only round-2 AES candidate that is actually safe to use in many realistic threat environments.
So what does any of this have to do with Skein?
There are a number of ways of turning a block cipher into a cryptographic hash function. The most widely used is probably Davies-Meyer. Another is Matyas-Meyer-Oseas. The key difference between the two is that in Davies-Meyer, the input (the data being hashed) is used as the block cipher key, whereas in MMO mode, the input is used as the plaintext to the block cipher, with the previous hash value being used as the key. Block ciphers are mostly designed to encrypt and decrypt text (even text that can be chosen or otherwise influenced by an attacker) under the control of random keys, rather than keys controlled by the attacker, so MMO mode places less 'strain' on the cipher design.
Skein in fact uses MMO mode, with a new block cipher named Threefish. Threefish has an incredibly simple round function, called MIX:
def mix(a, b, r): a = a + b b = rotate_left<r>(b ^ a)
which is iterated 72 times along with a simple word permutation; the permutation repeats every 4 rounds, and the rotation constants repeat after 8 rounds.
Using only add, XOR and fixed rotations for operations means timing attacks, as possible against AES, cannot be conducted against Threefish, because all of these operations take constant time on all known processors. And the simplicity of the round function makes it very easy to understand; so far the best known attack against Threefish can distinguish it from a random permutation after 35 rounds using 2478 operations, which puts 72 rounds at just about a safety factor of 2. As the Skein paper points out
For comparison, at a similar stage in the standardization process, the AES encryption algorithm had an attack on 6 of 10 rounds, for a safety factor of only 1.7.
Skein is built on top of MMO mode and Threefish using provable reductions - basically, if one assumes the existence of an attack on Skein, such as being able to find a collision in the hash, then this can be used to create an attack on Threefish and/or MMO mode themselves.
Skein is also fast - as fast or faster than MD5 and SHA-1 on many common 64 bit processors like the Core2 or PPC970. It is not the fastest of the second round contestants; that title seems to go to either Blue Midnight Wish or CubeHash, depending on parameters, but it certainly falls into 'fast enough', and specifically is much faster than SHA-2.
Another major reason to like Skein compared to most of the other submissions is Skein's support for personalization and keying. Personalization is the concept of producing many distinct hash functions from a single design. This is important, because some systems are vulnerable to having a hash generated in one context being replaced with a hash generated and intended for a different context. Of course not all system designs using a hash function are vulnerable to this, but that is the rub - if you use the same hash function everywhere, then one must be very careful when designing or changing the system that a vulnerability is not introduced. In contrast, by pervasively tagging hash functions with the intended context, one can be assured that such attack can never be possible. One system that does this is Tahoe-LAFS; quoting from the Tahoe paper presented at ACM Storage Security and Survivability '08 Workshop:
In addition, each time we use a secure hash function for a particular purpose (for example hashing a block of data to form a small identifier for that block, or hashing a master key to form a sub-key), we prepend to the input a tag specific to that purpose. This ensures that two uses of a secure hash function for different purposes cannot result in the same value.
It would be nice to have a SHA-3 that made this easy for developers to do; as far as I know Skein is the only contestant which supports it. It also supports other contextual inputs, like including the associated public key when generating input for a signing algorithm, extensions which obviously reflect the Skein authors' experience in designing and breaking protocols.
My particular concerns with the other finalists include: I feel designs that use AES components, like SHAvite, Groestl, and ECHO, are non-starters. They will be fast on processors, like the forthcoming Sandy Bridge that include AES instructions, but will remain slow and vulnerable to timing attacks everywhere else. This does not seem an acceptable trade off to me for an algorithm which is going to be used everywhere.
CubeHash, Luffa, and Keccak all seem promising, but I don't believe there is sufficient time in the next year or so for sufficient confidence to be developed in their overall styles; CubeHash being a somewhat custom, Salsa20-like function, and Luffa and Keccak using the sponge construction first used, I believe, in PANAMA, and which has seen a number of designs since, but nothing that has been widely adopted; and PANAMA itself turned out to be trivially breakable. This is not to suggest that either Luffa or Keccak has any weakness - it just means that I don't believe the cryptographic community has developed the necessary tools to be able to confidently state whether they do or not - maybe they are strong, or maybe they are trivially breakable but in a way that we do not currently know because sponge functions have not been a very major topic of research. In contrast, hash functions based on iterative modes of block ciphers have been how hash functions have been built in the open community going back to MD4 and MDC-2, which means we at least have a chance of understanding how to build and analyze one.