http://arstechnica.com/security/2013/04/why-livingsocials-50-million-password-breach-is-graver-than-you-may-think/
By Dan Goodin
Ars Technica
Apr 27, 2013
Update: A few hours after this article was published, the LivingSocial FAQ was
updated to say the company was switching its hashing algorithm to bcrypt. This
is a fantastic move by LivingSocial that adds a significant improvement to its
users. Bravo!
LivingSocial.com, a site that offers daily coupons on restaurants, spas, and
other services, has suffered a security breach that has exposed names, e-mail
addresses and password data for up to 50 million of its users. If you're one of
them, you should make sure this breach doesn't affect other accounts that may
be impacted.
In an e-mail sent Friday, CEO Tim O'Shaughnessy told customers the stolen
passwords had been hashed and salted. That means passcodes were converted into
one-way cryptographic representations that used random strings to cause each
hash string to be unique, even if it corresponded to passwords chosen by other
LivingSocial users. He went on to say "your Living Social password would be
difficult to decode." This is a matter for vigorous debate, and it very
possibly could give users a false sense of security.
As Ars explained before, advances in hardware and hacking techniques make it
trivial to crack passwords that are presumed strong. LivingSocial engineers
should be applauded for adding cryptographic salt, because the measure requires
password cracking programs to guess the plaintext for each individual hash,
rather than guessing passwords for millions of tens of millions of hashes all
at once. But a far more important measure of protection, password cracking
experts say, is the hashing algorithm used. SHA1, the algorithm used by
LivingSocial, is an extremely poor choice for secure password storage. Like MD5
and even the newly adopted SHA3 algorithms, it's designed to operate quickly
and with a minimal amount of computing resources. A far better choice would
have been bcrypt, scrypt, or PBKDF2.
[...]
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