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O'Reilly Network: Authentication and SquidAug 12, 2001, 13:45 (0 Talkback[s])
(Other stories by Jennifer Vesperman)
"HTTP authentication uses the same basic protocols for HTTP web servers and HTTP proxy servers. These protocols have two authentication modes: basic and digest mode. In basic mode, the client passes the user name and the password to the server as a single base64-encoded block. In digest mode, the server encodes the password with a different key in a unidirectional function and the client decodes the function using the password, then returns the key. This proves that the client knows the password, without actually transmitting the password at any point.
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