From Microchip Technology, Inc.

All KEELOQ encoders use the KEELOQ code hopping technology to make each transmission by an encoder unique. The encoder transmissions have two parts. The first part changes each time the encoder is activated and is called the hopping code part and is encrypted. The second part is the unencrypted part of the transmission, principally containing the encoder's serial number identifying it to a decoder. The hopping code contains function information, a discrimination value, and a synchronization counter. This information is encrypted by an encryption algorithm before being transmitted. A 64-bit encryption key is used by the encryption algorithm. If one bit in the data that is encrypted changes, the result is that an average of half the bits in the output will change. As a result, the hopping code changes dramatically for each transmission and can not be predicted.
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