The software records password hashes in a data store, receives a hash of a password from a client, and compares the supplied hash to the hash obtained from the data store.
Some authentication mechanisms rely on the client to generate the hash for a password, possibly to reduce load on the server or avoid sending the password across the network. However, when the client is used to generate the hash, an attacker can bypass the authentication by obtaining a copy of the hash, e.g. by using SQL injection to compromise a database of authentication credentials, or by exploiting an information exposure. The attacker could then use a modified client to replay the stolen hash without having knowledge of the original password.
As a result, the server-side comparison against a client-side hash does not provide any more security than the use of passwords without hashing.
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