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The CTR mode with encrypted nonces and its extension to AE

In the modified CTR (CounTeR) mode known as CTR2, nonces are encrypted before constructing sequences of counters from them. This way we have only probabilistic guarantees for non-overlapping of the sequences. We show that these guarantees, and therefore the security guarantees of CTR2, are strong enough in two standard scenarios: random nonces and non-repeating nonces. We also show how to extend CTR2 to an authenticated encryption mode which we call CHE (Counter-Hash-Encrypt). To extend, we use one invocation of polynomial hashing and one additional block encryption.