What is a One-Time Password (OTP)?

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suhashini25
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Joined: Tue Dec 03, 2024 8:04 am

What is a One-Time Password (OTP)?

Post by suhashini25 »

A One-Time Password (OTP), also known as a one-time PIN or dynamic password, is an automatically generated, unique numeric or alphanumeric string of characters that is valid for only one login session or transaction. Unlike traditional static passwords that remain the same across multiple uses, an OTP automatically expires after a very short period of time (typically 30 seconds to a few minutes) or immediately after it has been used once.

Key Characteristics of an OTP:
Single-Use: As the name suggests, each OTP is unique and can be used for only one authentication or transaction. Once it's used or expires, it cannot be reused.
Time-Limited: OTPs have a very short validity window. This significantly reduces the risk of an attacker being able to intercept and reuse the code.
Randomly Generated: OTPs are generated algorithmically and appear as random sequences of characters, making them unpredictable.
System-Generated: They are generated by the authentication system (e.g., a bank's server, an authenticator app) rather than being chosen by the user.
Primary Purpose: Enhanced Security (Two-Factor Authentication - 2FA)
The main purpose of an OTP is to significantly enhance security by acting as a crucial component of Two-Factor Authentication (2FA) or Multi-Factor Authentication (MFA). It serves as the "something you have" factor, complementing the "something you know" factor (your static password). Even if a malicious actor manages to steal your static password through phishing, keylogging, or a data breach, they still cannot gain access to your account without the current, valid OTP, which is sent to a device switzerland phone number list in your possession (e.g., your registered mobile phone).

How OTPs Work (Common Scenarios):
Login Authentication:

You enter your username and static password into a website or application.
The system recognizes your login attempt and, as a second step, generates an OTP.
This OTP is then sent to your registered device (most commonly via SMS to your mobile phone number).
You receive the OTP and enter it into the required field on the login screen.
If both your password and the OTP are correct, access is granted.
Transaction Authorization:

You initiate a sensitive transaction, such as a fund transfer in mobile banking (e.g., bKash, Nagad in Bangladesh), an online payment, or a password reset request.
Before confirming the transaction, the system sends an OTP to your registered phone number.
You must enter this OTP to authorize and complete the transaction. This ensures that only the legitimate account holder can approve financial movements.
Common Delivery Methods for OTPs:
SMS (Short Message Service): This is the most prevalent method. The OTP is sent as a text message to the user's registered mobile phone number. Its ubiquity makes it very popular, especially in countries like Bangladesh where virtually every smartphone user relies on SMS.
Email: Less secure than SMS, but sometimes used as an alternative or backup. The OTP is sent to the user's registered email address.
Authenticator Apps (Time-based One-Time Passwords - TOTP): Apps like Google Authenticator, Microsoft Authenticator, or Authy generate OTPs directly on the user's device (smartphone, tablet) based on a shared secret key and the current time. These OTPs regenerate every 30-60 seconds. This method is generally considered more secure than SMS because it doesn't rely on the cellular network and is not vulnerable to SIM swapping.
Hardware Tokens: Physical devices (like key fobs) that generate OTPs. These are highly secure but less common for general consumer use due to their cost and physical nature.
Importance in Bangladesh:
OTPs are an integral part of the digital financial ecosystem in Bangladesh. They are universally used by banks, mobile financial service (MFS) providers (e.g., bKash, Nagad, Rocket), and e-commerce platforms to secure online logins, authorize financial transactions, and verify user identity. The reliance on SMS OTPs is particularly high due to high mobile penetration and widespread familiarity with SMS. While effective against many common hacking techniques, users in Bangladesh are also advised to be vigilant against phishing and SIM swapping scams that attempt to intercept OTPs.
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