WPA supplicant
Note: This method creates ad-hoc network using WPA encryption. WPA2 is currently not supported (August 2013).

Ensure that wpa_supplicant is installed, and create a configuration file for it (see WPA supplicant for details).

/etc/wpa_supplicant-adhoc.conf

ctrl_interface=DIR=/run/wpa_supplicant GROUP=wheel

# use 'ap_scan=2' on all devices connected to the network
ap_scan=2

network={
    ssid="MySSID"
    mode=1
    frequency=2432
    proto=WPA
    key_mgmt=WPA-NONE
    pairwise=NONE
    group=TKIP
    psk="secret passphrase"
}

Run wpa_supplicant on all devices connected to the network with the following command:

# wpa_supplicant -B -i interface -c /etc/wpa_supplicant-adhoc.conf -D nl80211,wext