Two-Factor Authentication (2FA)

Two-factor authentication (2FA) is a security measure that adds an extra layer of protection to user accounts and transactions by requiring users to provide two different forms of identification before accessing their accounts or performing transactions. This process typically involves something the user knows (like a password) and something the user has, which can be one of several options:

• SMS Authentication: A one-time code sent to the user’s mobile phone via SMS.

• Authenticator Apps: Applications like Google Authenticator, Authy, or Microsoft Authenticator generate Time-based One-time Passwords (TOTPs) that the user needs to enter.

• Hardware: Physical devices like YubiKey that generate a one-time code or use a button press for authentication.

• Biometric Data: Fingerprint, facial recognition, or other biometric data can serve as the second factor.

By requiring a second form of authentication, 2FA reduces the risk of phishing attacks, where attackers might steal passwords but still lack the second factor needed for access. Many cryptocurrency exchanges and wallet providers offer or require 2FA to secure user accounts, and some decentralised applications (dapps) integrate 2FA to enhance security for users interacting with their services. Hardware wallets and other cold storage solutions also often incorporate 2FA to protect against unauthorised access.

2FA can be required for initiating or confirming transactions, ensuring that only the account owner can authorise movements of funds. Even if a malicious actor obtains a user’s password, they would still need the second factor to access the account, making unauthorised access significantly more difficult.