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You can read the whole series on certificates:
Imagine the following scenario: You're building a distributed application for the health insurance industry. The HIPPA (Health Insurance Portability and Accountability Act of 1996) Security Guidelines require secure access to sensitive information stored in compliant systems. Those requirements encompass both access by individuals and access by other applications. Therefore, in your distributed system, interactions between the components must be secure. Client applications must be able to authenticate the servers they connect to before transmitting sensitive information. Servers must be able to authenticate client applications before accepting and operating on sensitive information provided by clients.
One way to provide authentication is to use SSL (Secure Socket Layer). SSL, which is available for Java in the JSSE (Java Secure Socket Extension), handles authentication among communicating processes using X.509 technology and provides encryption support using various encryption algorithms of assorted strengths. For many applications, honestly, this is the way to go, especially if you want an out-of-the-box solution and can guarantee that both sides provide SSL support. However, SSL won't work in some cases; maybe you don't need it, can't use it, or don't want to use it. In those cases you have to provide similar functionality yourself.
Let's take a high-level look at the problem. Consider the following interactions between a client and a server, which are typical of both SSL-enabled applications (although hidden from view) and the custom applications built using X.509 technology:
Server authentication and client authentication essentially mirror each other, so it's sufficient to talk about one or the other. Let's look closely at the server authentication process (steps 1 and 2).