How password managers work
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What are password managers?
Passwords managers allow you to store, generate, and manage all of your passwords in a fully-encrypted account. In short it’s a safer way for you to conveniently store and manage complex and unique passwords for your various connected accounts. Without a password manager, you’re forced to remember all of your own passwords, which often means people are reusing the same weak, easily guessable passwords, leaving you at high-risk of exploitation from a cybercriminals.
With a handy password manager, you’ll only need to remember one master password while the autosave and autofill features of your password manager provider ensures your connected account credentials remain safe and secure. Most managers also allow you to store credit card information and secure notes.
Password managers generate complex, secure passwords for new account logins and store the information in a highly encrypted, centralized environment. That means no more tedious typing of complex passwords you can’t remember or weak passwords you’ve overused and seamless logins for all of your connected accounts.
Many password managers also allow secure password sharing (for the inevitable Netflix free-loader in your life, we all have that one friend) cross-platform support so your account is accessible on all browsers and devices, and multi-factor authentication to ensure your passwords remain as secure as possible.
How do password managers work?
Many password managers utilize a military-grade cipher to encrypt and decrypt data for the exclusive use of authorized parties. The type of encryption most commonly used by password managers (AES 256-bit) offers a level of encryption you’d find difficult to crack, even with unlimited resources at hand.
To understand a password manager’s functionality, it’s important to understand that there are three major types of password managers that work in different ways:
🟪 Locally-installed or offline
🟪 Web-based or online
🟪 Stateless or token-based
➡️ Locally-installed or offline password managers store passwords directly on your device. Passwords are kept in an encrypted file separate from the password manager itself but on the same computing device. Some managers store every password in a separate encrypted file, greatly increasing security, but this depends on the provider.
➡️ Web-based or “online” password managers are by far the most common type of manager and store your passwords in the cloud, almost always on your provider’s server, meaning they’re accessible from anywhere at any time, without the need to install the password manager software on each individual device. Online password managers are often paid services, but at lower rates they won’t break the bank. These providers usually have reliable 24/7 customer service to assist in case of any password emergencies.
➡️ Lastly, stateless or token-based keyword managers use a local piece of hardware such as a USB flash drive to house a key that unlocks a particular account. These managers don’t employ password vaults but rather generate new passwords every time you login. And, because there’s no database of information, these managers don’t require synchronization and are considered safer since there’s no place for a hacker to find all of your passwords. Unlike online password managers, token-based managers are often free and open-source. It’s worth mentioning - we wouldn’t recommend this type of manager for amateur users since customer support will be found exclusively through forums and knowledge bases, rather than dedicated customer support staff. And, on top of that, you would need a smart card reader or a USB stick to actually generate tokens.
Time stamps:
0:00 intro
0:28 Password managers in short
1:49 How do they work?
2:09 Locally-installed or “offline”
3:09 Web-based or “online”
3:54 Stateless or token based
4:37 Bottom line
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