  Quantum Key Distribution (QKD) relies on quantum communication to allow
distant parties to share a secure cryptographic key. Widespread adoption of QKD
in current telecommunication networks will require the development of simple,
low cost and stable systems. However, current QKD implementations usually
include additional hardware that perform auxiliary tasks such as temporal
synchronization and polarization basis tracking. Here we present a
polarization-based QKD system operating at 1550 nm that performs
synchronization and polarization compensation by exploiting only the hardware
already needed for the quantum communication task. Polarization encoding is
performed by a self-compensating Sagnac loop modulator which exhibits high
temporal stability and the lowest intrinsic quantum bit error rate reported so
far.The QKD system was tested over a fiber-optic link, demonstrating tolerance
up to about 40 dB of channel losses. Thanks to its reduced hardware
requirements and the quality of the source, this work represents an important
step towards technologically mature QKD systems.
