Hashing a password once is insecure
No, multiple hashes are not less secure; they are an essential part of secure password use.
Iterating the hash increases the time it takes for an attacker to try each password in their list of candidates. You can easily increase the time it takes to attack a password from hours to years.
Simple iteration is not enough
Merely chaining hash output to input isn't sufficient for security. The iteration should take place in the context of an algorithm that preserves the entropy of the password. Luckily, there are several published algorithms that have had enough scrutiny to give confidence in their design.
A good key derivation algorithm like PBKDF2 injects the password into each round of hashing, mitigating concerns about collisions in hash output. PBKDF2 can be used for password authentication as-is. Bcrypt follows the key derivation with an encryption step; that way, if a fast way to reverse the key derivation is discovered, an attacker still has to complete a known-plaintext attack.
How to break a password
Stored passwords need protection from an offline attack. If passwords aren't salted, they can be broken with a pre-computed dictionary attack (for example, using a Rainbow Table). Otherwise, the attacker must spend time to compute a hash for each password and see if it matches the stored hash.
All passwords are not equally likely. Attackers might exhaustively search all short passwords, but they know that their chances for brute-force success drop sharply with each additional character. Instead, they use an ordered list of the most likely passwords. They start with "password123" and progress to less frequently used passwords.
Let's say an attackers list is long, with 10 billion candidates; suppose also that a desktop system can compute 1 million hashes per second. The attacker can test her whole list is less than three hours if only one iteration is used. But if just 2000 iterations are used, that time extends to almost 8 months. To defeat a more sophisticated attacker—one capable of downloading a program that can tap the power of their GPU, for example—you need more iterations.
How much is enough?
The number of iterations to use is a trade-off between security and user experience. Specialized hardware that can be used by attackers is cheap, but it can still perform hundreds of millions of iterations per second. The performance of the attacker's system determines how long it takes to break a password given a number of iterations. But your application is not likely to use this specialized hardware. How many iterations you can perform without aggravating users depends on your system.
You can probably let users wait an extra ¾ second or so during authentication. Profile your target platform, and use as many iterations as you can afford. Platforms I've tested (one user on a mobile device, or many users on a server platform) can comfortably support PBKDF2 with between 60,000 and 120,000 iterations, or bcrypt with cost factor of 12 or 13.
More background
Read PKCS #5 for authoritative information on the role of salt and iterations in hashing. Even though PBKDF2 was meant for generating encryption keys from passwords, it works well as a one-way-hash for password authentication. Each iteration of bcrypt is more expensive than a SHA-2 hash, so you can use fewer iterations, but the idea is the same. Bcrypt also goes a step beyond most PBKDF2-based solutions by using the derived key to encrypt a well-known plain text. The resulting cipher text is stored as the "hash," along with some meta-data. However, nothing stops you from doing the same thing with PBKDF2.
Here are other answers I've written on this topic:
DISCLAIMER: This answer was written in 2008.
Since then, PHP has given us password_hash and password_verify and, since their introduction, they are the recommended password hashing & checking method.
The theory of the answer is still a good read though.
TL;DR
Don'ts
- Don't limit what characters users can enter for passwords. Only idiots do this.
- Don't limit the length of a password. If your users want a sentence with supercalifragilisticexpialidocious in it, don't prevent them from using it.
- Don't strip or escape HTML and special characters in the password.
- Never store your user's password in plain-text.
- Never email a password to your user except when they have lost theirs, and you sent a temporary one.
- Never, ever log passwords in any manner.
- Never hash passwords with SHA1 or MD5 or even SHA256! Modern crackers can exceed 60 and 180 billion hashes/second (respectively).
- Don't mix bcrypt and with the raw output of hash(), either use hex output or base64_encode it. (This applies to any input that may have a rogue
\0 in it, which can seriously weaken security.)
Dos
- Use scrypt when you can; bcrypt if you cannot.
- Use PBKDF2 if you cannot use either bcrypt or scrypt, with SHA2 hashes.
- Reset everyone's passwords when the database is compromised.
- Implement a reasonable 8-10 character minimum length, plus require at least 1 upper case letter, 1 lower case letter, a number, and a symbol. This will improve the entropy of the password, in turn making it harder to crack. (See the "What makes a good password?" section for some debate.)
Why hash passwords anyway?
The objective behind hashing passwords is simple: preventing malicious access to user accounts by compromising the database. So the goal of password hashing is to deter a hacker or cracker by costing them too much time or money to calculate the plain-text passwords. And time/cost are the best deterrents in your arsenal.
Another reason that you want a good, robust hash on a user accounts is to give you enough time to change all the passwords in the system. If your database is compromised you will need enough time to at least lock the system down, if not change every password in the database.
Jeremiah Grossman, CTO of Whitehat Security, stated on White Hat Security blog after a recent password recovery that required brute-force breaking of his password protection:
Interestingly, in living out this nightmare, I learned A LOT I didn’t know about password cracking, storage, and complexity. I’ve come to appreciate why password storage is ever so much more important than password complexity. If you don’t know how your password is stored, then all you really can depend upon is complexity. This might be common knowledge to password and crypto pros, but for the average InfoSec or Web Security expert, I highly doubt it.
(Emphasis mine.)
What makes a good password anyway?
Entropy. (Not that I fully subscribe to Randall's viewpoint.)
In short, entropy is how much variation is within the password. When a password is only lowercase roman letters, that's only 26 characters. That isn't much variation. Alpha-numeric passwords are better, with 36 characters. But allowing upper and lower case, with symbols, is roughly 96 characters. That's a lot better than just letters. One problem is, to make our passwords memorable we insert patterns—which reduces entropy. Oops!
Password entropy is approximated easily. Using the full range of ascii characters (roughly 96 typeable characters) yields an entropy of 6.6 per character, which at 8 characters for a password is still too low (52.679 bits of entropy) for future security. But the good news is: longer passwords, and passwords with unicode characters, really increase the entropy of a password and make it harder to crack.
There's a longer discussion of password entropy on the Crypto StackExchange site. A good Google search will also turn up a lot of results.
In the comments I talked with @popnoodles, who pointed out that enforcing a password policy of X length with X many letters, numbers, symbols, etc, can actually reduce entropy by making the password scheme more predictable. I do agree. Randomess, as truly random as possible, is always the safest but least memorable solution.
So far as I've been able to tell, making the world's best password is a Catch-22. Either its not memorable, too predictable, too short, too many unicode characters (hard to type on a Windows/Mobile device), too long, etc. No password is truly good enough for our purposes, so we must protect them as though they were in Fort Knox.
Best practices
Bcrypt and scrypt are the current best practices. Scrypt will be better than bcrypt in time, but it hasn't seen adoption as a standard by Linux/Unix or by webservers, and hasn't had in-depth reviews of its algorithm posted yet. But still, the future of the algorithm does look promising. If you are working with Ruby there is an scrypt gem that will help you out, and Node.js now has its own scrypt package. You can use Scrypt in PHP either via the Scrypt extension or the Libsodium extension (both are available in PECL).
I highly suggest reading the documentation for the crypt function if you want to understand how to use bcrypt, or finding yourself a good wrapper or use something like PHPASS for a more legacy implementation. I recommend a minimum of 12 rounds of bcrypt, if not 15 to 18.
I changed my mind about using bcrypt when I learned that bcrypt only uses blowfish's key schedule, with a variable cost mechanism. The latter lets you increase the cost to brute-force a password by increasing blowfish's already expensive key schedule.
Average practices
I almost can't imagine this situation anymore. PHPASS supports PHP 3.0.18 through 5.3, so it is usable on almost every installation imaginable—and should be used if you don't know for certain that your environment supports bcrypt.
But suppose that you cannot use bcrypt or PHPASS at all. What then?
Try an implementation of PDKBF2 with the maximum number of rounds that your environment/application/user-perception can tolerate. The lowest number I'd recommend is 2500 rounds. Also, make sure to use hash_hmac() if it is available to make the operation harder to reproduce.
Future Practices
Coming in PHP 5.5 is a full password protection library that abstracts away any pains of working with bcrypt. While most of us are stuck with PHP 5.2 and 5.3 in most common environments, especially shared hosts, @ircmaxell has built a compatibility layer for the coming API that is backward compatible to PHP 5.3.7.
Cryptography Recap & Disclaimer
The computational power required to actually crack a hashed password doesn't exist. The only way for computers to "crack" a password is to recreate it and simulate the hashing algorithm used to secure it. The speed of the hash is linearly related to its ability to be brute-forced. Worse still, most hash algorithms can be easily parallelized to perform even faster. This is why costly schemes like bcrypt and scrypt are so important.
You cannot possibly foresee all threats or avenues of attack, and so you must make your best effort to protect your users up front. If you do not, then you might even miss the fact that you were attacked until it's too late... and you're liable. To avoid that situation, act paranoid to begin with. Attack your own software (internally) and attempt to steal user credentials, or modify other user's accounts or access their data. If you don't test the security of your system, then you cannot blame anyone but yourself.
Lastly: I am not a cryptographer. Whatever I've said is my opinion, but I happen to think it's based on good ol' common sense ... and lots of reading. Remember, be as paranoid as possible, make things as hard to intrude as possible, and then, if you are still worried, contact a white-hat hacker or cryptographer to see what they say about your code/system.
Best Answer
The salt doesn't need to be secret. It does need to be unpredictable for a given password.
Deriving the salt from the password completely misses the point.