What is a Security Token? How do Security Tokens work? (Best Explanation)

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What is a Security Token? How do Security Tokens work?

Security Tokens took the Blockchain world by storm. The reasons for this are their useful functions and regulatory compatibility. But what is a Security Token, how do they work and what makes them so useful? We will answer all these questions in this article.

“What is a Security Token? How do Security Tokens work?” – Content:

  1. What is a Security Token?
  2. How Do Security Tokens Work?
  3. 3 Types of Security Tokens
  4. Security Token Use Cases
  5. What Benefits Do Security Tokens Provide?
  6. Disadvantages Security Tokens
  7. „What is a Security Token? How do Security Tokens work“ – Conclusion

What Is a Security Token?

A Security Token is a portable device that stores all your personal information. This is why they are often called authentication tokens. In order to get access to a software service, you need to connect the Security Token to the system. There are Security Token Services (STS) that can issue you with a Security Token and confirm your identity.

How do Security Tokens work

Now that we know what Security Tokens are, let’s let me answer the important question: How do Security Tokens work? We use Security Tokens to gain access to products or services. To do this, we authenticate ourselves with the token and thereby obtain access rights. There are a variety of methods for authenticating users. For example, you can verify yourself with an encrypted digital key or a fingerprint.
Once you have connected your security token to your computer or entered the code, your information is analyzed. The system then compares your information with the information in the database. If everything is correct, you will be granted access to the system.

Security tokens use the same authentication concept as passwords. With tokens, however, you do not need to enter any login details, but simply provide the encrypted information with a device. This means, of course, that your information must be on a secure device in your possession.

3 Types of Security Tokens

There are 3 different types of security tokens you should know. The 3 most important ones are explained below:

Connected tokens

You physically connect the Security Token with the system you want to access. An example of this would be a USB stick.

Disconnected tokens

These are the most commonly used type of Security Tokens. Here a two-factor authentication with passwords is used for identification. You do not need to physically plug these tokens into a device. Instead, you must enter a code that generates a token for you.

Contactless tokens

With a contactless token, there is no need to physically connect to a device or enter a code. With this type of token, your authentication data is sent to a specific system via a token. This system then checks whether you have access rights. Bluetooth tokens are a good example of this.

Security Token Use Cases

Of course there are many different use cases for which you can use security tokens. In the following, we will show you the 2 most important use cases for which Security Tokens can be used.

1) Sensitive network systems

You can use Security Tokens to access a sensitive network system. This could be an online bank account or trading platform, for example. With the help of the Security Tokens, you can add an extra layer of security. This means that you use the token in addition to a password to confirm your identity. This additional security measure makes it almost impossible for hackers to get hold of your data.

2) Cryptographic encryption

Another use case is the storage of sensitive data. The Security Token is then used to authenticate your account. Some store cryptographic keys, a system used in cryptographic currency services such as Bitcoin, but the key must be kept secret. Some use time-sensitive passwords that are matched between the token and the network and reset at constant intervals. Others use biometric techniques such as fingerprint data to ensure that only the owner of the security token can access protected information.

What Benefits Do Security Tokens Provide?

The most obvious benefit of Security Tokens is, of course, security. You can use them to build an extra layer of protection. This makes it more difficult for hackers to steal your passwords.

Besides security, Security Tokens also protect your assets. These are valuable and usually confidential. If you protect your access data with Security Tokens, you are of course also protecting your assets.

Another advantage is the additional verification. With a Security Token you not only have a knowledge factor but also a possession factor. This means that it is no longer enough for a hacker to know your password. He must also be in possession of the token.

Security Tokens are also compliant with regulations. One reason for this is that there is a real object behind the token. That is why you can trade with them in almost any country.

Disadvantages Security Tokensrovide?

Unfortunately, Security Tokens also have some disadvantages. If you lose your token or it is stolen, you will no longer have access to your system or asset. The hacker will still need your password, which protects your valuables. However, the token is then no longer needed.

Another disadvantage of security tokens is that they can be hacked. This can happen if you unknowingly pass on sensitive information to an unauthorized person. This is known as man-in-the-middle fraud. Any network connected to the Internet is vulnerable to such an attack.

„What is a Security Token? How do Security Tokens work?“ – Conclusion

Security Tokens are devices that allow you to confirm your identity in the digital world. You can use them to gain access to certain products or services. There are connected Tokens, disconnected Tokens and contactless Tokens. The advantages of tokens are security, protection, verification and regulatory compliance, but you lose the object of value when you lose the token. There is also the risk that they can be hacked.

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