This post will look at a progression of ways to store passwords, from naive to sophisticated.
Most naive: clear text
Storing passwords in plain text is least secure thing a server could do. If this list is leaked, someone knows all the passwords with no effort.
Better: hash values
A better approach would be to run passwords through a secure hash function before storing them. The server would never store a password per se, only its hashed value. When someone enters a password, the server would check whether the hash of the password matches the stored hashed value. If the list of hashed values is leaked, it will take some effort to recover the original passwords, though maybe not much effort, as I wrote about in my previous post.
Better still: add salt
The next step in sophistication is to append a random value, called a salt, to the password before applying the hash function. The server would store each user’s salt value and the hash of the password with the salt added.
Now if the user has a naive password like “qwerty” you couldn’t crack the password by doing a simple Google search. You can find the hash value of “qwerty” by searching, but not the hash value of qwerty + random salt, because although the former is common the latter is probably unique. You could still crack the password if the hash is insecure, but it would take a little effort.
Better still: key stretching
Suppose an attacker has a list of salt values and corresponding hash values for salt + password. They could guess passwords, hashing each with a salt value, to see if any hash values match. They would start with the most common passwords and probably get some matches.
Key stretching is a way to make this brute force search more time consuming by requiring repeated hashing. In the following stretching algorithm, p is the password, s is the salt, h is the hash function, and || means string concatenation.
Now the time required to test each password has been multiplied by r. The idea is to pick a value of r that is affordable for legitimate use but expensive for attacks.