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Algorithm agility and OATH

By Burt Kaliski, RSA Laboratories
May 19, 2005 12:00 PM ET

Computerworld - The startling recent announcement that the SHA-1 hash function was not as secure as previously believed also raised interesting questions in the world of one-time password (OTP) technology, since the newly proposed HOTP algorithm is based on SHA-1.
Should the industry standardize around a single OTP algorithm? And what role should algorithm agility have in the future of OTPs?
HOTP, the HMAC-based One-Time Password algorithm, is favored by OATH, a consortium organized last year to promote OTP technology. HOTP is based on the HMAC-SHA-1 algorithm (HMAC stands for Hash-based Message Authentication Code), which in turn is based on SHA-1. In HOTP, a OTP is computed as a function of a token secret and a counter value:
one-time password = HMAC-SHA-1 (token secret, counter)
Although HOTP is new, HMAC-SHA-1 itself is fairly widely standardized as a method for ensuring message integrity and is also often recommended for additional purposes such as key derivation.
As it turns out, the recent research results, which affect only SHA-1's collision resistance -- the difficulty of finding two new messages with the same hash value -- don't directly affect HMAC-SHA-1, which primarily depends on the one-wayness of SHA-1. Since HOTP depends on the strength of HMAC-SHA-1, not the collision-resistance of SHA-1, the research results don't directly affect HOTP, either.
Nevertheless, there is still good reason to question whether HOTP is suitable as a standard algorithm for OTP generation, and, more generally, whether such a standard algorithm is even necessary at all.
When an algorithm supports a protocol that is employed in a one-to-many basis, standardization can be quite important, because the "many" may reflect multiple different implementations from a variety of vendors. For instance, code signing and digital certificates need standard algorithms to ensure that the signatures generated by one party can be verified by many others.
OTP algorithms that are based on a shared token secret, however, are inherently one-to-one: one token generates a OTP, and one authentication authority verifies it -- namely, the one that shares the token secret. Other parties (a desktop client, an application server) may transport the OTP, but they don't need to know how to generate or verify it. (Although the authentication authority might be implemented across multiple servers, these servers act in concert, being under the same administrative control.)
If a single, standard OTP algorithm is not necessary, one might ask if there is any harm in establishing a single standard. There are two major reasons for why it would be counterproductive to do so.
First, algorithms come and go over the years. SHA-1 itself was already on the

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