What is two factor authentication

Authentication is how you identify yourself to a online service or website, a computer, or another technical system.  Authentication is measured in factors.  The most common mode of authentication is simple that uses a username and a password.  This factor of authentication is “something you know”.  Two factor authentication uses multiple factors to authenticate yourself with the system.  The most common is “something you have” and “something you know”.  This is how I identify myself with my bank.  Something I have is my bank card and I enter my bank card number into the online banking portal, something I know is my bank password and once entered I am able to access my online bank account.

There is also a 3rd not as well known factor of authentication which is “something you are” and this would be all the bio-metric factors such as fingerprint, eye retina scan, whole face scan like the new iPhone X has.

Two-factor authentication uses two of these factors. The idea is that it should be harder to steal two different factors than steal one. For instance, if you need to use a key and enter a code to get in a house, someone who steals your key can’t get in, and neither can someone who saw you enter the code. You need two different kinds to get in.

About a decade ago some companies and banks would give out tokens to provide an extra layer of security for their clients.  However this practice seems to of fallen by the way side and is also expensive to maintain than just allowing clients to logon with their bankcard and password.  Tokens are also easily lost and then clients would be locked out of doing simple things on their internet banking such as bill payments and wire transfers.  Some banks and other online systems have also implemented using secret questions and answers in order to provide an extra layer of security.

Cryptocurrency Exchange’s Authentication Methods

Something I have noticed since starting to get into buying cryptocurrency is that the centralized exchanges have for the most part a higher level of security than today’s internet banking websites.  First when you initially sign up you have to give them pictures of your ID card as well as pictures of yourself holding a piece of paper identifying yourself and that days date.  Then you get assigned a username and password.  On top of that you are sent a sms code to your sell phone to further identify yourself before logging on.  Some exchanges even have digital captcha’s that involve sliding puzzle pieces into place ontop of all the previous authentication methods in order to logon.  One thing I would love to see is if Internet banking moved more into this space of offering sms codes to logon or using identification apps inconjunction to the simple authentication methods they often employ.

The last thing I want to do when logging onto my credit card portal is remember the school I went to back twenty years ago when I was 7 years old and then remember if I need to put it in upper or lowercase just to get access to my balances.

Out-of-band authentication

OOB uses a completely separate channel, such as a mobile device, to authenticate a transaction originated from a computer. Any cryptocurrency transaction, would trigger a phone call, text, or notification on a specialized app that further authorization is needed for a transaction to go through. Requiring two channels makes it quite difficult for a hacker to steal money, as they would need to compromise two separate systems (cell phone and computer) in order to pull off a heist.


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