The present invention is a method and apparatus for protection of various items against counterfeiting using physical unclonable features of item microstructure images. The protection is based on the proposed identification and authentication protocols coupled with portable devices. In both cases a special transform is applied to data that provides a unique representation in the secure key-dependent domain of reduced dimensionality that also simultaneously resolves performance-security-complexity and memory storage requirement trade-offs. The enrolled database needed for the identification can be stored in the public domain without any risk to be used by the counterfeiters. Additionally, it can be easily transportable to various portable devices due to its small size. Notably, the proposed transformations are chosen in such a way to guarantee the best possible performance in terms of identification accuracy with respect to the identification in the raw data domain. The authentication protocol is based on the proposed transform jointly with the distributed source coding. Finally, the extensions of the described techniques to the protection of artworks and secure key exchange and extraction are disclosed in the invention.