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I understand it is initialization vector, but what is it ? Is it appended at the beginning of each packet as a key piece? Is it used to encrypt the entire packet? What does IV do exactly?

Howdy_McGee
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The IV is included in each packet and is different in each packet. It is used to generate a distinct "packet key" for each packet, the packet key consisting of the fixed master key and the initialization vector.

David Schwartz
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