The public Internet is the world's largest system of inter-networked computers. Adequate security means for protecting sensitive data communicated over the Internet is not, however, provided. The present invention, therefore, provides a system and method for performing secure transactions over an insecure packet-switched communication network. This is achieved by interconnecting a number of master nodes over the insecure communication network. The master nodes are capable of transmitting encrypted data packets over the insecure network via pseudo-random communication paths. The master nodes are further capable of returning to any state in a secure transaction in the event of a network failure. The master nodes are also capable of using new keys to encrypt each data packet.