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What Is A Software Token?

What Is A Software Token

Date First Published: 6th April 2024

Topic: Cybersecurity

Subtopic: Security Mechanisms & Technologies

Article Type: Computer Terms & Definitions

Difficulty: Medium

Difficulty Level: 5/10

Learn about what a software token is in this article.

A software token, also known as a soft token, is a security token in the form of an application running on a device. It authenticates a user as part of a multi-factor authentication system. Instead of a piece of dedicated hardware, software tokens exist as software on a device.

How Do Software Tokens Work?

Software tokens work by using a secondary device as a method of authentication. For example, an authenticator app may be used on a secondary device, which can generate one-time-use passwords that add a level of security beyond a regular username and password. When a user attempts to log into a digital asset, the security system will generate a soft token and send it to the user. The soft token cannot be used again after it has been used. Every time someone attempts to log in, a new soft token needs to be generated. Even if a malicious actor manages to obtain a soft token, this procedure makes it harder for them to be exploited.

Uses Of Software Tokens

Software tokens are often used for the following purposes:

  • Secure logins - Network, system, and online service logins are secured using software tokens. In industries where security is vital, such as organisation networks or financial services, they are especially important.
  • Two-factor authentication (2FA). Soft tokens are a key component in 2FA processes, adding an extra layer of security. A user needs both something they know (a password) and something they have (the code from the token).
  • Transaction authorisation. In banking, soft tokens are used to authorise transactions, helping prevent fraud.

Advantages and Disadvantages Of Software Tokens

The advantages of software tokens are:
  • They have no physical form, so they cannot be lost or stolen. Even if the device with the software token is lost, the existing key can be cancelled and replaced with a new one that can be added to a new device instead of waiting for a replacement hard token.
  • Compared to hard tokens, they are less expensive to use and manage as they require little modification of existing security systems.
  • They are more convenient than hardware tokens. Unlike hardware tokens, software tokens do not need to be carried around and are easily accessible through devices, such as smartphones.
The disadvantages of software tokens are:
  • Since they rely on software and network connections to work, they are more vulnerable to security breaches.
  • They rely on a device to access the software token. If the device ran out of battery or was lost, access would be limited.
  • In order to ensure that the software remains secure, regular updates and maintenance are required. If this is not available, it may expose user's devices to security risks.


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