As an extra layer of protection, two-factor authentication asks for two separate pieces of information before granting access to an account. It enhances security by adding an extra layer of verification on top of a password. In the two-factor authentication procedure, there are two components:
- Knowledge factor: This is anything the user knows, such as a PIN or a password.
- Possession factor: This refers to something the user possesses, like a smart card, security token, or mobile device.
The idea behind this approach is that knowing a user’s password (the knowledge factor) wouldn’t allow someone to access their account without possessing the second factor. Because attackers are significantly more difficult to infiltrate, the risk of unauthorized access is decreased dramatically.
Obtaining a one-time code via SMS, creating codes using a mobile app like Authy or Google Authenticator, or utilizing biometric information like fingerprints or face recognition are standard two-factor authentication methods. Many online accounts, such as those for email, banking, social media, and cryptocurrency wallets, utilize two-factor authentication to protect sensitive data from unauthorized access and to boost cybersecurity.
Two-factor Authentication Methods
Various two-factor authentication methods include:
SMS or Text Message Codes
Users will get a one-time code by SMS to complete the login process. These are called text message codes or SMS. Even while it is possible to intercept SMS messages, this method is not as secure as others.
Mobile Authenticator Apps
Authy and Google Authenticator are two examples of smartphone apps users can download to generate time-based, one-time code. Each app is in sync with the server, and at regular intervals, it generates a random code that users can input during login.
To successfully finish the login procedure, the user must enter a one-time code sent to the email address they registered with.
Hardware Security Tokens
To authenticate users, these physical devices generate codes that are only valid for a single instance or include buttons that need to be hit. While they may be expensive, they offer a high level of safety.
Users can authenticate themselves through verification, which involves comparing the biometric identifier that they use, such as a fingerprint or facial scan, to the biometric information that has been saved.
The users are provided with one-time backup codes during the setup process. If the primary two-factor authentication method is unavailable, these can be utilized.
Users will receive a notification on their mobile devices whenever they try to log in. Approval or rejection of the request is possible. Users should consider the benefits and drawbacks of each approach before committing any money to any of the ones mentioned above. An important example that started a debate on the security of SMS 2FA occurred in March 2023 when a Coinbase client sued the business for more than $96,000 in losses caused by SIM swapping.
Two-factor Authentication Work
Accounts protected by two-factor authentication often require users to provide a known password and a physical item, such as a mobile device or hardware token, to access the account. For a detailed explanation of how two-factor authentication works, watch this video:
User Initiates a Login
It all begins when someone tries to access an online account through an email, social media, or banking website through a link.
User Shares Something
Users’ familiarity with their usernames and passwords makes them a natural choice for the first authentication factor. The user enters the login and password as usual.
Server Verifies the First Factor
The server verifies the first factor by checking its database for a match between the user’s supplied login and password. The first authentication factor is confirmed if the credentials are correct, but account access has not yet been granted.
Server Requests a Second Factor
The server will request the second factor when the first one has been successfully verified. The user provides an item that is legally theirs. The user usually possesses the second factor, such as a mobile phone, a hardware token, or an authentication program.
User Provides Something
The second factor is usually the user’s actual physical ownership of anything like a mobile phone, a hardware token, or an authentication application. Hardware tokens, short message service (SMS) codes, and email codes are just a few methods to utilize the second factor.
User Enters the Second Factor
The user enters the one-time code or provides the second factor depending on the circumstances. This code is constantly evolving and time-sensitive, which contributes to an increased level of security.
Server Verifies Second Factor
Regarding the second factor, the server checks to ensure that it agrees with the anticipated value. If it does, then the authenticity of the second authentication factor is verified.
Granting Access Starts the Session
Ifation factors, namely something the user possesses and something they are aware of, are successfully validated, the server will grant access to the login credentiauser’s login credentials when signed in. As a result of the established session, they have access to their account and all of its features.
How to Setup Two-factor Authentication in Crypto?
Multiple steps are needed to configure cryptocurrency two-factor authentication: Authy, Google Authenticator, or a similar authenticator app to be downloaded from the app store first. The user must log in to their cryptocurrency account next. Click “Enable 2FA” in the account security settings’ 2FA section. After opening their authenticator app, users can scan the crypto platform’s QR code to link their accounts. They can then click “Scan QR Code” or “Add Account” from the menu.
Users should store system backup codes safely. These backup codes allow users to access their accounts if they lose their phone or authenticator app. The authenticator app generates a time-based, one-time password (OTP) for cryptocurrency platform setup. Log out of their account and log in again to test two-factor authentication. Enter the app’s OTP when prompted. Users should store software recovery keys offline for protection. These keys can recover two-factor authentication accounts after a lost phone or app malfunction. Many believe authenticator apps are the most secure two-factor authentication solution, while several exchanges offer SMS or email verification.
Finally, users should regularly verify and update their two-factor authentication settings, including their recovery information and authenticator app. This makes accessing cryptocurrency holdings by other parties much harder. Never share your recovery key, OTP, or other sensitive data.
Two-factor Authentication vs. Multi-factor Authentication
Users must use at least two authentication methods to verify their identities while accessing their accounts. As a security measure, this is called MFA. Two-factor authentication (2FA) uses a combination of two factors—a known one, like a password, and an unknown one, like a smartphone—to increase security; multi-factor authentication (2FA) uses biometrics, such as fingerprints or facial recognition, or additional possession factors, such as smart cards.
This multi-layered strategy dramatically improves security by making it more difficult for unauthorized users to gain access. It allows for greater customization of security measures to specific requirements and risk levels.
Security Issues with Two-factor Authentication
While two-factor authentication does a lot to make things safer, it is not bulletproof. During phishing attempts, users could be tricked into providing both factors. Changing SIM cards also gives attackers the ability to intercept SMS codes. Malware can infect some authenticator apps. Because of the severe consequences of losing backup codes (lockouts), they must be stored securely.
Copying biometric 2FA is possible in the same way as with fingerprints. Lastly, user complacency might diminish the efficiency of two-factor authentication (2FA) if users ignore or deactivate it. Even with these caveats, two-factor authentication (2FA) is a valuable security feature, and users can mitigate its dangers by being cautious and using multiple authentication methods whenever required.