Authentication is the process of verifying the identity of a user typically through a username and a password. In some cases, additional information may be required, such as a security question or a one-time code sent to a mobile device before being granted access to the system. Performing authentication is important to ensure that only authorized users are able to access a system that protects sensitive data and prevents unauthorized changes from being made. In some cases, authentication may also be used to verify a user’s identity, which is important when financial transactions are taking place or when sensitive information is being shared.
Two-factor authentication (2FA) is an additional layer of security that can be used to protect access to exchanges and digital currency wallets. 2FA requires users to provide two pieces of information in order to gain access to their wallets. The first piece of information is typically a password or PIN, backed up by a one-time code that is generated by an authentication app. On blockchains, authentication is done using a private key, which serves as an identification measure to prove ownership of a blockchain address. A private key allows users to access their accounts and sign transactions. Private keys are kept secret and should never be shared with anyone. Any type of authentication that has multiple stages should make it difficult for hackers to gain access to digital currency wallets.