The story
Whitfield Diffie had spent years travelling around the United States thinking about one question: how could strangers, say two people who meet on a computer network, communicate in secret without first meeting to swap keys? In 1974 he teamed up with Martin Hellman, a young professor of electrical engineering at Stanford. Their paper New Directions in Cryptography appeared in November 1976 and opened with the confident line that cryptography stood on the brink of a revolution.
The idea at its heart was a one-way street. Multiplying a number by itself on a clock of hours is easy; given only where the hand stopped, working out how many times it was done (the "discrete logarithm") seems to be very hard when the clock is huge. Each side keeps its count private and sends only where its hand stopped. Diffie and Hellman also sketched the wider idea of public-key cryptography, a lock with one key to close it and another to open it, though they did not yet have a way to build one. That came a few months later, on the next platform.
A third name belongs here. Ralph Merkle, then a student at Berkeley, had already come up with a way to agree a key in public using a pile of small puzzles, and his work helped shape theirs. Hellman later suggested that the scheme should be called Diffie-Hellman-Merkle.
The secret version
In 1997 the British signals agency GCHQ revealed that its own people had got there first. James Ellis had proposed "non-secret encryption" around 1970; Clifford Cocks found a practical public-key cipher in 1973, and Malcolm Williamson worked out what is essentially the Diffie-Hellman exchange soon afterwards. It all stayed classified for more than twenty years, so the public world found the ideas independently.
Today a version of this exchange runs whenever your browser opens a secure connection. It usually uses elliptic curves rather than a clock of whole numbers, because the curves give the same safety with much shorter numbers. Diffie and Hellman received the Turing Award, computing's highest honour, for the 1976 paper in 2015.
How it was broken
The exchange itself has never been broken. With a prime of 2048 bits (more than 600 decimal digits) nobody knows how to run the clock backwards in any reasonable time. Attacks go round it instead: a man in the middle who pretends to be Bob to Alice and Alice to Bob (which is why the exchange is always combined with some way of checking who you are talking to), or numbers that are too small. In 2015 researchers showed that many servers still accepted old, deliberately weakened 512-bit settings left over from export rules of the 1990s, and broke those connections.
Large quantum computers, if they are ever built, could run the clock backwards quickly. That is why new "post-quantum" key exchanges are being added alongside the old one.