What is a one-time password?

A one-time password (OTP) is a single-use, randomly generated code with a short expiration period used for authenticating or validating a user during a single login session or transaction. It is a component of multi-factor authentication (MFA) that bolsters access controls by adding another layer of security with an extra verification step beyond traditional static passwords.  

One-time passwords are generated in several ways. Some systems use algorithms synchronized with the server and client. Others use challenge-response mechanisms where the user provides some information, and the server generates the OTP in response. There are also time-based OTPs that remain valid only for a brief period.  

Once created, one-time passwords are delivered to users via various channels, including SMS, email, or dedicated authentication applications. 

What is a time-based one-time password (TOTP)?

A time-based one-time password (TOTP) is a type of one-time password that is valid for a short period, typically from 30 seconds to a few minutes, after which it expires and a new password can be generated. TOTPs are generated using a cryptographic algorithm (i.e., based on the HMAC-SHA1 (hash-based message authentication code – secure hash algorithm) cryptographic function) that combines a shared secret key with the current timestamp, ensuring that each password is unique and unpredictable. The algorithm ensures that both the authentication server and the user’s token (e.g., a mobile app or a hardware token) generate the same password during each time step, allowing for secure verification. 

Implementing time-based one-time passwords requires careful synchronization between the server and the user’s device. If the clocks are significantly out of sync, the time-based one-time password generated by the client may not match the server’s TOTP, which can lead to authentication failures. 

Time-based one-time passwords are widely adopted in various applications, including banking, email, and social media platforms, to secure user logins and transactions.

Users typically receive time-based one-time passwords through dedicated authenticator apps installed on their mobile devices, which do not require an internet connection to generate the password. 

Why one-time passwords are used

One-time passwords are used for a variety of online transactions and access control. The adoption of one-time passwords is attributed to several key factors, including the following. 

Bolster weak passwords

Unless forced to use strong passwords, users often create and reuse simple, easily guessable passwords across multiple sites. One-time passwords prevent this from being a single point of access control failure by automatically creating unguessable, single-use passwords. 

Comply with regulatory requirements

Using one-time passwords as part of multi-factor authentication can help organizations comply with regulatory standards that mandate robust data protection measures. One-time passwords add a layer of security to protect regulated sensitive information, such as personally identifiable information (PII) and protected health information (PHI). 

Enhance security

One-time passwords add another authentication step to access controls to increase security with a unique password. This dynamic nature of one-time passwords also makes them resistant to replay attacks (i.e., an attacker intercepts a password and tries to use it later), or phishing attacks (users are tricked into revealing their passwords).   

Facilitate secure financial transactions

One-time passwords are commonly used to secure financial transactions, adding an extra verification step to confirm the user’s identity and prevent fraud or theft. 

What is the difference between one-time passwords, time-based one-time passwords, and static passwords?

One-time passwords, time-based one-time passwords, and static passwords serve the fundamental purpose of securing user authentication but differ significantly in their operation and use case applications. 

One-time passwords (OTP)

One-time passwords are generated for a single login session or transaction. They can be created in various ways, including algorithmically based on a shared secret or sent directly to the user’s device via SMS or email after being generated by an authentication application or hardware token. 

Time-based one-time passwords (TOTP)

Time-based one-time passwords are a subset of one-time passwords that are valid for only a short window of time, which is set by the administrator—usually from 30 seconds to just a few minutes.  

Time-based one-time passwords are generated using a cryptographic algorithm that combines a secret key with the current timestamp to ensure that each time-based one-time password is unique and only valid within its time frame.  

Static passwords

Static passwords, fixed passwords that a user sets and uses over multiple sessions, are the traditional form of authentication. They consist of a fixed string of characters known by the user and the authentication system.

The main advantage of static passwords is their ease of use and implementation. Static passwords are widely used because they are relatively easy to manage from an administrative standpoint and simple for users to use. Security policies are used to enforce the use of strong passwords and changing passwords regularly. 

How a one-time password is generated

One-time passwords provide a temporary and dynamic means of authenticating user identities. They are generated using several approaches. The generation of one-time passwords involves a combination of cryptographic algorithms, secret keys, and, often, external factors such as time or event counters.  

Commonly used methods for generating one-time passwords include the following.

Mathematical algorithms

One basic method involves generating a new password based on an initial password with a mathematical algorithm. The initial password, also known as the seed, can be randomly generated or pre-defined by an administrator. The server and the client both know the algorithm and the seed, allowing them to generate the same sequence of passwords.    


In this method, the server sends a unique, unpredictable challenge to the client. The client combines this challenge with a secret key to generate a one-time password. This method can provide a high level of security but requires a direct and secure communication channel between the server and the client. 


Time-based one-time password is a more advanced method that generates a one-time password based on the current time. The timestamp is usually divided into fixed intervals, usually from 30 seconds to a few minutes, and a new password is generated for each interval. This method requires accurate synchronization between the server and the client’s clocks. 

Time-based one-time passwords are generated using a shared secret key and the current time as input to a cryptographic hash function. The process is standardized under RFC 6238.  

The key elements in time-based one-time password generation include:

  • Shared secret 
    A unique key is shared between the server and the client, established during the initial setup.
  • Current time 
    The current timestamp, usually in Unix time format, is divided into time steps to ensure that each one-time password is only valid within a specific time frame. 
  • Cryptographic algorithm 
    An algorithm is used to compute the hash based on the shared secret and current time stamp.

The resulting hash is then truncated and converted into a human-readable format, usually a 6 to 8-digit code, that can be entered by the user for authentication. 


HMAC-based one-time passwords (HOTP) is another method that uses a hash-based message authentication code (HMAC). It combines a secret key with a counter. The server and client both maintain this counter and use it with the shared secret key to generate the one-time password.  

Each time a one-time password is generated, the counter is incremented, ensuring that each password is unique. Like time-based one-time passwords, the process is standardized under RFC 6238.  

The key elements in HMAC-based one-time password generation include: 

  • Shared secret
    Similar to a time-based one-time password, a unique key is shared between the user and the authentication system. 
  • Counter 
    A sequential counter that synchronizes between the client and the server is used. Each time a one-time password is generated or used, the counter increments. 
  • Cryptographic hash function 
    The HMAC algorithm combines the shared secret and counter, producing a hash value. This hash is then processed similarly to time-based one-time passwords, resulting in a numerical code that serves as the one-time password. 

Considerations with time-based passwords and HMAC-based one-time passwords

While time-based one-time passwords offer convenience and added security through time sensitivity, HOTPs provide flexibility in environments where time synchronization might be challenging. Both methods, however, underscore the importance of secure key management and system integrity to maintain the efficacy of the one-time password as a secure authentication tool. 

The security of both time-based one-time passwords and HMAC-based one-time password mechanisms heavily relies on the secrecy of the shared secret key. If this key is compromised, an attacker could generate valid one-time passwords. Therefore, secure key storage and transmission are crucial. 

Additionally, time-based one-time passwords require accurate time synchronization between the client and server, as even small discrepancies can lead to authentication failures. HMAC-based one-time passwords, while not dependent on time, require careful management of the counter to ensure they remain synchronized. 

Finally, one-time passwords can be delivered to users through various channels, including SMS messages, emails, or through dedicated authentication applications that generate time-based one-time passwords, but these require internet connectivity. HMAC-based one-time passwords can be delivered without an internet connection. 

What is single-factor authentication?

Single-factor authentication, SFA or 1FA, is a security process that requires only one method of verification from the user to gain access to a system or application. With single-factor authentication, the user typically provides a username and a password, which is the most common form of authentication.  

The widespread use of single-factor authentication is largely due to the fact that it is relatively easy to implement, use, and maintain. No additional hardware or software is needed beyond the initial setup for password protection, which makes it a cost-effective option for many organizations.  

This type of authentication is based on something the user knows, making single-factor authentication straightforward and user-friendly. However, the simplicity of single-factor authentication also makes it the least secure form of authentication because it relies solely on the strength and secrecy of the password. If the password is weak, guessable, or has been exposed through a data breach, unauthorized access can easily occur. 

The reliance on single-factor authentication makes systems susceptible to various attacks, such as phishing, brute force, or social engineering tactics, where attackers can obtain or guess passwords. In response to these vulnerabilities, many organizations are moving towards multi-factor authentication methods that add layers of security by requiring additional verification factors, such as a biometric factor or a one-time password. 

Despite its vulnerabilities, single-factor authentication remains in use for accessing less sensitive systems where the convenience of quick access outweighs the potential security risks. It serves as a basic security measure but is increasingly being supplemented or replaced by more robust authentication methods in environments where protecting sensitive information is a priority. 

What is two-factor authentication?

Two-factor authentication (2FA) is a user validation approach that goes beyond the conventional single-factor authentication username and password system. It requires users to provide two distinct forms of proof of identity before they can access their accounts or systems. This method adds a significant layer of protection to defend against unauthorized users gaining access to online accounts, systems, and data. 

The two distinct types of evidence of identity, called factors, include something the user knows (e.g., a password or personal identification number (PIN)), paired with the second layer, which could be something the user possesses (e.g., smartphone or a security token) or an inherent characteristic of the user (e.g., biometric data, such as fingerprints or facial recognition).   

The adoption of two-factor authentication is largely driven by the vulnerabilities of one-factor authentication, with a single point of failure, and the increase in the volume, velocity, and sophistication of cyber threats. These have proven effective in getting through one-factor authentication defenses.  

By integrating a second authentication factor, two-factor authentication provides protection even in instances where a password may be compromised.

However, two-factor authentication is not without its drawbacks. It can cause inconvenience to the user, who must take another step to access resources. Also, if the second factor involves a physical device, there is always a risk of losing or misplacing it. Despite these challenges, many online services use two-factor authentication. 

Balancing security and convenience

The widespread adoption of one-time passwords reflects the broader trend that sees IT and security teams considering a range of advanced security measures. Like one-time passwords, each approach comes with pros and cons. When selecting solutions for identity-based protections for secure access, teams must strike a balance between user convenience and stringent security protocols. 

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