A one-time password, or OTP, is a unique code generated and sent to a user through email or a mobile device. The user must enter this code to authenticate their identity. OTPs are valid for single use only, which provides extra security since they cannot be reused.
Types of One-Time Passwords
OTPs can come in various ways, and some of the most common ones are:
- SMS OTP – These one-time passwords are sent to a user in the form of a text message, and they are valid for a couple of minutes and can only be used once. Banking institutions are one of many industries that use this OTP method.
- TOTP – Time-based one-time passwords are codes generated through a secret key that is constantly changing and cannot be reused.
- HOTP – A dedicated hardware device, such as a security token, generates hardware-based one-time passwords.
Advantages of One-Time Passwords
Using one-time passwords has advantages, which include:
- One-time passwords can be combined with other authentication methods to improve security, which is the underlying concept of multifactor authentication. OTPs usually consist of six digits and are only valid temporarily.
- One-time passwords help reduce the risk of phishing attacks because users can be sure they are logging into the correct website or app.
- One-time passwords help industries comply with regulations and mandates requiring robust authentication methods.
Examples of One-Time Password Usage
Below are some examples of one-time passwords in use:
- Your banking institution sends you a text message when you log into your account to verify your identity.
- Your Gmail account requires an authenticator code through Google Authenticator to allow you to log into your account.
- The code you generate using a security token when logging into your work computer.