Zfone uses a new protocol called ZRTP, which is better than the other approaches to secure VoIP, because it achieves security without reliance on a PKI, key certification, trust models, certificate authorities, or key management complexity that bedevils the email encryption world.
Zfone also does not rely on SIP signaling for the key management, and in fact does not rely on any servers at all. It performs its key agreements and key management in a purely peer-to-peer manner over the RTP packet stream. It interoperates with any standard SIP phone, but naturally only encrypts the call if you are calling another ZRTP client. This new protocol has been submitted to the IETF as a proposal for a public standard, to enable interoperability of SIP endpoints from different vendors.
In the future, the ZRTP protocol will be integrated into standalone secure VoIP clients, but today we have a software product that lets you turn your existing VoIP client into a secure phone.
The current Zfone software runs in the Internet Protocol stack on any Windows XP, Mac OS X, or Linux PC, and intercepts and filters all the VoIP packets as they go in and out of the machine, and secures the call on the fly. You can use a variety of different software VoIP clients to make a VoIP call.
The Zfone software detects when the call starts, and initiates a cryptographic key agreement between the two parties, and then proceeds to encrypt and decrypt the voice packets on the fly. It has its own little separate GUI, telling the user if the call is secure. It's as if Zfone were a "bump on the cord", sitting between the VoIP client and the Internet. Think of it as a software bump-on-the-cord. Maybe a bump in the protocol stack.
There is also a ZRTP SDK for VoIP client developers to integrate this protocol into their VoIP clients, for both software and hardware VoIP clients. The software is implemented in C.