With cyberattacks on the rise and increased reliance on cloud systems and shared data, there is a prominent need for security and user verification. User authentication has become one of the biggest security efforts for businesses of all sizes. Token-based authentication is one of the most prevalent ways of verifying a user’s identity and access rights.

You’ve likely used token-based tools without knowing it, but what are they? Learn about using tokens for authentication, how they work and when to use them so you can increase your system’s security.

Token-Based Authentication

Token-based authentication is a security procedure that generates encrypted tokens that allow users to access restricted sites, pages and resources without having to re-enter their credentials each time. For example, a user would use their username and password to log in to a site and the token-based authentication process would allow the user to access other resources for a specific period without needing to verify their identity each time they switch sites.

Administrators have control over token actions and transactions. They control what sites or applications authentication tokens can be issued for. Additionally, tokens eventually expire — once the user quits an application, logs out or has been inactive for a certain amount of time, the token becomes invalid and the user will have to re-verify their identity.

Token-based authentication can be compared to using a stamped ticket to re-enter an event. Just as a stamped ticket would get you back into an event while it’s still valid, a token would get you back into a site while it’s still valid. The process offers more security and convenience than traditional password-based authentication methods.

What Is an Authentication Token?

Authentication tokens are an encrypted, secure format for transmitting sensitive data like login credentials, payment information, medical data or other identifying data. Tokens are uniquely generated when a user logs in and is then shared with websites or applications the user is permitted to access. As the token gets transmitted and shared with other sites and programs, it automatically verifies the user’s identity to skip the login process on every site.

Three components make up an authentication token:

  • Header: The token header identifies the token type and signing algorithm being used.
  • Payload: The payload provides information regarding the user, token issuer, expiration details and other metadata.
  • Signature: The signature verifies the user’s identity and that the token is authentic.

Types of Authentication Tokens

There are many ways users access protected information, which means different authentication token types are necessary to provide access in different ways. Here are a few types of tokens that provide users with access.

Connected Tokens

Connected tokens are physical tools like USB devices, smart cards, drives, keys and discs that plug in to a device. Once plugged in, the connected token provides the authentication information the computer system needs to allow access to the user.

Contactless Tokens

Contactless tokens are often also physical devices, though in this case, they provide authentication without physically connecting to a system. When contactless tokens are within range of the computer a user is logging in to, the token will wirelessly connect to the computer to communicate the necessary information.

Disconnected Tokens

Disconnected tokens allow devices to communicate with servers over long distances, which means the token and the system never have to touch or be within close proximity. Most commonly, the disconnected token will issue a code the user can enter on their computer to gain access to protected resources. One of the most common examples of this is using a cellphone in a two-factor authentication process. In this case, the code would be sent to your cellphone for you to enter on the computer.

Software Tokens

Software tokens are a big update from traditional, physical tokens. Software tokens can be mobile applications that integrate with other security tools like two-factor authentication and single sign-on. These tokens protect a user’s information even if the token is compromised.

Unlike traditional tokens that are vulnerable to theft, require IT support, are easily lost and expensive, software tokens update automatically, don’t require IT assistance, can’t be lost and are easy to use.

JSON Web Token

JSON web tokens (JWTs) enable users to access corporate systems on mobile devices and applications. JWTs share data through an algorithm and key pairing to ensure optimal security even from mobile devices. These tokens allow developers to authenticate users appropriately regardless of the platform.

When to Use Authentication Tokens

Authentication tokens can significantly improve the way your systems operate. While tokens can be helpful to any system, there are a few instances in which you should really use them. If your server experiences any of the following situations, you should consider trying authentication tokens:

  • Often grant temporary access: If your server grants and rescinds access repeatedly to accommodate user fluctuations based on time, date and events. For example, university library site administrators would benefit from authorization tokens.
  • Require granular access: Some servers grant access to resources based on a document’s properties rather than a user’s properties. Unlike traditional passwords, authentication tokens allow for that level of fine-tuned details. For example, you could use tokens to direct everyone to read and interact with a specific document in an entire journal.
  • Are prime hacking targets: If your server stores sensitive data and documents, you’re likely a prime hacking target. If you get hacked, the consequences could seriously damage your company. Tokens are ideal for these types of situations because they offer more protection than simple passwords.

Five-Step Process of Using Tokens for Authentication

While the different types of authentication tokens work a bit differently from each other, the process is all relatively the same. Token-based authentication can be broken down into five basic steps:

  1. Login: When the user logs in to a computer or platform with their credentials, an access request is automatically issued to the server.
  2. Verification and generation: The server then verifies the information to confirm the user should have the requested access. Once the credentials are confirmed, an encrypted token is generated for the user to use for a given period of time.
  3. Token transmission: Next, the token is transmitted back to the user for current use and grants access to the data.
  4. Storage and verification: The computer, browser or application the user is signing in to will store the authentication token for future use within the allotted time frame. When the user moves to a different website or application, the token will get decoded to verify the user has access to the site. If the token is verified, they’ll be granted access to the materials. This process occurs each time the user navigates to a new site.
  5. Expiration: The token is active until the user closes the server or logs out. At that point, the token expires and is deleted. The next time the user tries to log in, the process will restart.

Tokens prove you’re allowed to access specific resources or complete certain tasks without having to verify your identity at every step. Authentication tokens allow websites to add additional security layers without making the process more tedious for its users.

Token-Based Best Practices

Token-based authentication is intended to protect your server and improve your system security. However, tokens are only as effective as the process you build them around. You need to consider your company’s needs and how tokens fit into those needs. To help ensure you’re making the best token decisions make sure your tokens are:

  • Secure: Your tokens need to be encrypted to prevent hackers from easily finding the information. When the token and server communicate, ensure it’s through secure HTTPS connections. If your tokens are insecure, they’re doing your system no good. Make sure they can provide the necessary security for your company.
  • Private: Just as users shouldn’t share passwords or credentials, they shouldn’t share this part of your security system either. Token authentication devices should never be shared or passed between people or departments. Encourage users to keep their authentication tokens private to prevent them from getting into the wrong hands.
  • Appropriate: Choose from the token types wisely. Consider your company’s needs or individual department needs, as some tokens are less ideal for certain situations. For example, avoid using JWTs for session tokens because they’re expensive and present interception security risks when used in this situation. Be sure to choose appropriate tokens to ensure effectiveness.
  • Tested: Periodically testing your token system helps ensure it’s running properly and is secure. Tests will help identify any problems or weaknesses, which should be fixed immediately to prevent security breaches. Testing is proactive and helps you correct problems before they create irreversible damage.

Do your research and ask others for their opinions. Choosing the right token-based authentication system can make all the difference in your company’s security.

Benefits of Token-Based Authentication

There are numerous reasons to use token-based authentication, the benefits are just one. If you’re unsure whether token-based authentication is right for your company, consider how you could benefit from implementing tokens:

  • Tokens expire: Once a user is done with their session, the token expires. This aspect of token-based authentication helps protect users’ accounts and reduces the risk of cyber attacks. For example, tokens prevent users from leaving their credentials logged in on a computer after walking away, which opens the door for hackers to enter your system.
  • Stateless: An authentication service creates authentication tokens containing the necessary information to verify users without login credentials. One of the most beneficial aspects of token-based authentication, this prevents users from having multiple different usernames and passwords for the various websites, platforms and applications necessary to do their job.
  • Encrypted and machine-generated: Because tokens are encrypted and machine-generated, they’re significantly more difficult to tamper with, and if they are, they’re easy to identify and block. Each token is generated uniquely and algorithm-protected. This aspect of token-based authentication makes it significantly more secure than passwords.
  • Streamlined login process: Tokens are extremely user-friendly and convenient because users don’t have to re-enter credentials several times. The login process is much quicker, allowing users to be more productive and improving their overall experience.
  • Prevent hackers: Passwords alone are easy for hackers to intercept. Tokens add an additional barrier to prevent hackers in the form of two-factor authentication. Users verify their identity through smartphones and physical tokens, which can prevent hackers from accessing an account even if they intercept credentials.

How Optimal IdM Can Help

Optimal IdM offers a wide variety of identity and access management products and resources that meet your specific security needs. We customize our solutions and work with you to create and manage a specialized solution for your organization. Here are a few of our solutions and services that can help improve the way you manage authentication and identification.


Our OptimalCloud product is a public or private cloud service. Our federated cloud offers features like multi-factor authentication, single sign-on, mobile authentication, user management and more. The OptimalCloud will help you reduce IT costs, eliminate deployment barriers and meet compliance and audit initiatives.

Fortune 1000 companies typically prefer to use our private OptimalCloud because it’s highly customizable, we handle the configuration for you and each of your customers is on a private server dedicated to them. Despite having a few limitations in comparison, the OptimalCloud shared platform is ideal for small to mid-sized businesses. This option tends to be more cost-effective for these sized businesses.

Identity Governance and Administration (IGA) Services

This comprehensive and innovative solution offers a way to centrally manage user identities and access across systems. Our IGA services allow you to configure and maintain all IGA policies, including workflow, security, access and audit. You can also manage users’ roles and be notified when actions are out of policy, giving you the necessary control to match your business’s needs.

Optimal Authentication Service (OAS)

OAS is our Authentication-as-a-Service (AaaS) solution that allows you to implement various levels and types of authentications. This service enables you to add multi-factor authentication (MFA) capabilities like one-time passcodes to web and non-web applications, protecting your systems against cyberattacks.

Identity and Access Management (IAM) Solutions

Identity and access management solutions from OptimalCloud help you control and monitor data access throughout your company while maintaining speed and compliance. With tools like MFA, single sign-on, advanced user management, active directory federation services (ADFS) and more, IAM software is extremely beneficial for businesses of all sizes.

IAM Managed Services

Our managed IAM services offer all the tools and benefits of our IAM solutions, plus some. Rather than operating an in-house IAM process, our professional, high-trained and focused IAM experts manage your IAM system. We handle everything from installation and configuration to monitoring and maintenance so you can turn your focus back to other areas of your company.

Manage Identity Access With Optimal IdM

From customizable solutions to premier customer support, Optimal IdM has the services and solutions to keep your company secure and efficient. Token-based authentication tools like MFA are included in many of our solutions. We’ve even won awards for our MFA solutions, proving we have the expertise to help you effectively manage your systems.

Contact our representatives to find out how we can customize solutions for you.


  • The database in which all of your organization’s sensitive identity data is stored.
  • A digital ledger in which digital transactions are recorded chronologically and publicly.
  • Securely managing customer identity and profile data, and controlling customer access to applications and services.
  • The means of linking a person's electronic identity and attributes, stored across multiple distinct identity management systems.
  • A legal framework that sets guidelines for the collection and processing of personal information of individuals within the EU.
  • The policy-based centralized orchestration of user identity management and access control.
  • An authentication infrastructure that is built, hosted and managed by a third-party service provider.
  • A security system that requires more than one method of authentication from independent categories of credentials to verify the user's identity for a login or other transaction.
  • A global provider of innovative and affordable identity access management solutions. 
  • Managing and auditing account and data access by privileged users.
  • Tools and technologies for controlling user access to critical information within an organization.
  • An authentication process that allows a user to access multiple applications with one set of login credentials.