Quantum key distribution with passive decoy state selection

We propose a quantum key distribution scheme which closely matches the performance of a perfect single photon source. It nearly attains the physical upper bound in terms of key generation rate and maximally achievable distance. Our scheme relies on a practical setup based on a parametric downconversion source and present day, nonideal photon-number detection. Arbitrary experimental imperfections which lead to bit errors are included. We select decoy states by classical postprocessing. This allows one to improve the effective signal statistics and achievable distance.