In 1978, professors Ron Rivest, Adi Shamir and Len Adleman (RSA) chose the names Alice and Bob to make it easier for people to understand how public key encryption works. Alice and Bob were chosen as placeholders for Person A and Person B to make the details easier to follow in a paper entitled "A Method for Obtaining Digital Signatures and Public-Key Cryptosystems." The names were intended to help people visualize how two entities could exchange information privately over an electronic mail system.
Alice and Bob are the best -known security scenario characters but there are many more used for various roles. For example, Eve is often used to represent an eavesdropper. For more complex requirements, the names Carol, Carlos or Charlie may represent Person C and Dan or Dave a fourth participant, and so on through the alphabet sequentially as required. Other common characters from the large potential cast, include: Craig, a password cracker; Mallet or Malory (often abbreviated as Mal), a malicious attacker; Trudy, an intruder and Victor, a verifier.
Alice and Bob and their co-characters are commonly featured in tech humor. The following example is from xkcd: