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Web3 authentication is an often overlooked yet highly influential aspect of blockchain technology. It allows users to log into various websites and applications using a single digital identity that works universally across the web.
Gone are the days when users had to create multiple accounts for each app or site they used, all of which were vulnerable to centralized control, data breaches, and cyberattacks.
In this blog post, we'll explore the fundamentals of web3 authentication, how it operates behind the scenes, its advantages over traditional web2 authentication methods like OAuth, and why integrating web3 authentication into your app could significantly improve user acquisition and onboarding. Let's delve into it.
What is Web3 Auth?
Web3 authentication, often referred to as Web3 Auth, is a decentralized method of verifying user identities on the internet, a crucial component of the Web3 ecosystem. It provides secure and private digital identities, giving individuals ownership and control over their personal data.
In traditional authentication methods, users are required to log in with a username and password. However, Web3 Auth allows users to verify their identity by connecting their cryptocurrency wallet to an application. This approach eliminates the need for traditional login credentials and provides a higher level of security and decentralization.
Web3 authentication works by using a user's private key to create a digital signature. This signature can be used to verify the user's identity and the integrity of their transactions or messages.
How does web2 authentication work?
Web2 authentication, also known as traditional web authentication, works by having the user provide a set of credentials (like a username and password) to access and interact with an application or website. The application or website then checks the provided credentials against a database of authorized users to verify the identity of the user. If the provided credentials match a set of stored credentials, the user is granted access to the site.
To enhance security, many websites now employ additional measures such as multi-factor authentication, which requires the user to provide multiple forms of identification, such as a password and a one-time code sent to their phone. This makes it more difficult for an attacker to gain unauthorized access, even if they have obtained the password through hacking or social engineering.
However, traditional authentication methods have remained largely unchanged for a long time and have some drawbacks that haven't been fully addressed.
Comparison chart between Web2 and Web3 authentication
Based on username and password
Based on decentralized identifiers (DIDs) and public-private key pairs
User Data Management
Stored on centralized servers
Stored on blockchain or decentralized storage solutions
Vulnerable to data breaches and phishing attacks
Secure against data breaches and phishing attacks due to the use of cryptography.
Users have limited control over their personal data
Users have full control over their personal data and can choose to share it selectively
Limited interoperability between different systems and services
Seamless interoperability across different systems and services using standardized protocols
Scales well for large user bases but may require sharding or off-chain transactions
Scales poorly for large user bases due to computational complexity
Requires significant infrastructure investment and maintenance costs
Minimal infrastructure investment is required; users pay transaction fees
Familiar interface for users accustomed to traditional web applications
It may require additional steps for users to understand and manage their digital identity
Understanding the Various Approaches to User Authentication
There are several types of user authentication methods, each with its own advantages and disadvantages. The most common methods of user authentication include
Username/Password Authentication: This is the most common form of authentication, where a user enters their username and password into a login form. If the credentials match what is stored in the database, the user is granted access. However, this method can be insecure if passwords are not properly encrypted or if users reuse the same password for multiple accounts.
Two-Factor Authentication (2FA): 2FA requires users to provide at least one additional authentication factor beyond a password. Additional factors can be any of the user authentication types or a one-time password sent to the user via text or email. This authentication type strengthens the security of accounts because attackers need more than just credentials for access.
Multi-Factor Authentication (MFA): MFA requires two or more factors. Factors can be anything from knowledge (like passwords), possession (like a security token or smart card), or inherence (like a biometric characteristic). MFA is considered more secure than 2FA as it requires more than one form of identification.
Token-Based Authentication: This method enables users to log in to accounts using a physical device, such as a smartphone, security key, or smart card. It can be used as part of MFA or to provide a passwordless experience.
Biometric Authentication: This method uses biometric features such as fingerprints, facial recognition, or iris scans to authenticate a user. The system captures and stores the biometric data, and when the user logs in, they present their biometric credentials which are compared to the stored data.
Certificate-Based Authentication: This method uses a digital certificate to identify a user before accessing a resource. It is often used as part of a two-factor or multi-factor authentication process.
Passwordless Login: This method allows users to log into an account without needing a username or a password. It is considered more secure as there are no weak passwords to be guessed or brute-forced by attackers.
Single Sign-On Authentication: This method allows users to log in and access multiple accounts and applications using just one set of credentials. It simplifies username and password management for users, and it makes logging in faster and easier.
The Limitations of Web2 Authentication
Web2 authentication, which is based on username and password systems, comes with several disadvantages:
Tedious username and password management: Users are required to create unique usernames and passwords for each application they use. Keeping track of so many login credentials can be tedious, which often leads many users to use the same ones across accounts, posing a security risk. This also increases friction in the onboarding process for users.
Centralized control of user data: When user data is stored in centralized servers, it is prone to potential hacks or breaches, which can result in the theft of login credentials, personal information, and financial data. Users must also trust third-party providers to manage their data & protect their privacy, but many of these providers maliciously collect, share, and sell users' data.
Phishing attacks: Phishing attacks, in which attackers try to trick a user into revealing their username and password, are an increasingly common threat across the web. If a user falls for a phishing attack, their credentials can be used to gain unauthorized access to their accounts.
Risk of cybercrime, fraud, and privacy issues: Web2 does not offer a high level of privacy. A server owner, such as a Big Tech firm like Twitter or Meta, can censor any account it hosts. There is also a risk of cybercrime, fraud, and a general lack of privacy.
Difficulty in managing multiple authenticators: If a new authenticator has to be registered for an existing account, it can be challenging to link the new token to the existing profile due to security risks. This requires either having a replacement authenticator that is intended exactly for this use or resetting it.
Lack of data portability: In Web2, data portability was an afterthought. Users face significant friction when trying to move their data from one service to another.
Increased energy consumption: Web3 will take up a lot more energy, which means supporting blockchain technology on a major scale may not be feasible. Transactions can also be slower because data needs to be processed through several computers on a decentralized network rather than a single server.
How does web3 authentication work?
Here's how it works:
Registration: Instead of making a username and password, users make a pair of keys – one public and one private. The public key is saved on a blockchain, while the private key stays on the user's device.
Public Key Infrastructure (PKI): The system manages these keys and creates a digital certificate holding the user's public key and other details.
Authentication Request: When users want to access the application, their browser asks the server to authenticate. This request contains their public key and a one-time random number. The server sends a challenge that requires the user to prove they own the private key. This challenge is made using a unique number and the user's public key.
Signing: The user's browser uses the private key to sign the challenge, along with some extra details like the user's ID and the time. This signed response is sent back to the server. The server checks if the signature matches the user's public key. If it does, access is granted.
Session Setup: Once authenticated, a secure connection (session) is established between the client and server. All communication during this session is encrypted using a secret key shared between them. Users can cancel their authentication by posting a message on the blockchain. This message includes their public key and a signature made with their private key. The server checks the blockchain for these messages and ends the user's session if found.
What are the benefits of Web3 Authentication?
Web3 Auth is a powerful feature of the blockchain that enables users to sign into any app or website across the web through a single, digital, interoperable identity. This system is designed to provide several key advantages compared to traditional authentication methods.
Enhanced Security through Cryptographic Keys: Web3 authentication relies on cryptographic keys for user authentication, offering heightened security by empowering users to manage their data independently. This method minimizes the risks associated with unauthorized access or data breaches.
Simplified User Experience: Web3 authentication streamlines user interaction by eliminating the need for multiple usernames and passwords across various apps. This simplicity can significantly enhance user engagement and retention for decentralized applications (dApps).
Interoperable Digital Identities: Web3 authentication establishes a unified digital identity across different dApps, fostering audience engagement and curated experiences. New dApps can leverage this by offering access or benefits to holders of specific NFTs or tokens, enhancing their user base.
Token-Based Access to Exclusive Features: Web3 authentication enables dApps to limit access to particular functionalities based on token ownership. This approach creates immersive user experiences and introduces novel monetization strategies for companies operating in the decentralized space.
Preservation of User Privacy: Through Web3 authentication, users retain control over their data and limit information sharing with third-party apps. This ensures high privacy, allowing users to interact with applications anonymously or using pseudonyms, safeguarding sensitive identity details.
Why Web3 Auth is the future
Web3 authentication is the future due to its decentralized, user-controlled authentication solution that offers increased security, privacy, and a better user experience. It allows users to sign into any app or website across the web through a single, digital, interoperable identity, typically their cryptocurrency wallet, instead of using traditional usernames and passwords. This approach provides increased security by relying on cryptographic keys, a better user experience by eliminating the need for multiple usernames and passwords, and increased data security, scalability, and privacy for users.
The shift to Web3 authentication is driven by the opportunities it presents for new and innovative authentication methods that put the power back in the hands of users and unlock new capabilities for what’s possible. For example, wallet-based authentication eliminates the need for users to create a new private identity, offering a more user-friendly and secure authentication method.