Posted on March 22, 2023.

The global cost of cybercrime is expected to exceed $10.5 trillion by the year 2025, according to research by the firm Cybersecurity Ventures. 

To put that figure into perspective, if cybercriminals were to form their own country, it would be the world’s third-largest economy behind the United States and China.

Cybercriminals are only getting more sophisticated, and the risks they present are only getting larger. As a result, it’s essential to have the best possible security measures in place to protect your data. 

One of the most effective ways of doing this is with multi-factor authentication (MFA). MFA is a security technique that adds an additional authentication factor to the traditional “username and password” login. 

The most commonly used methods of MFA today are SMS and software authentication. When a user signs in to a system, they are first asked to provide a private key provided by a text message or app.

The Problem With SMS and Software-Based Authentication

SMS authentication relies on a code sent to a user’s mobile phone via text message. This is typically secure. However, there have been instances in which attackers have been able to hijack a user’s phone number and receive the authentication code themselves (a technique known as “SIM swapping” or “SIM jacking”). 

Software-based authentication, similarly, typically uses a mobile app to generate a unique code. This method of authentication is more secure than SMS, but it is still vulnerable to phishing attacks. Attackers can create fake login pages that appear legitimate and trick users into handing their credentials. 

What is Hardware Authentication?

Hardware authentication is a type of MFA that uses a physical device to generate the code used for authentication. These devices can take many forms, including USB sticks, smart cards and biometric authentication devices like fingerprint readers. 

When a user attempts to access a network, they must present their hardware authentication device along with an email address, username and/or password. The device then generates a unique, one-time code that the user must enter to gain access.

Pros of Hardware Authentication

  1. Increased Security:  Because hardware devices are not connected to any network, they cannot be hacked or compromised in the same way that SIM cards and apps can. Even if a hacker steals a user’s login info, they will not be able to access the system without the hardware device.
  2. Convenient: Hardware devices are easy to use and require minimal training. They can be carried on a keychain or in a wallet, making them highly portable.
  3. Compliance: Hardware-based MFA is required for certain industries, such as finance, government and healthcare. Hardware-based authentication allows organizations to remain compliant with industry regulations.

Cons of Hardware Authentication

  1. Cost: Hardware devices can be more costly than using SMS or software authentication. Depending on the size of the organization, purchasing devices for all personnel can be a major investment.
  2. Maintenance: In addition to procurement costs, maintenance costs are also higher compared to software authentication. Batteries eventually run out with regular use and need to be replaced, and devices can be lost or damaged.
  3. User Adoption: Some users may find hardware devices cumbersome or inconvenient, which can lead to resistance and lower adoption rates.

Is Hardware Authentication Right for Me?

Deciding on whether to adopt hardware keys for your organization’s authentication is a matter of balancing the cost of the hardware authentication devices against the benefits that they provide. Hardware devices are more expensive than SMS or software-based authentication methods, and they require additional maintenance and support. However, they also provide a higher level of security and are not dependent on external systems that may be vulnerable to attack.

Hardware-based authentication is particularly useful for organizations that handle sensitive or confidential information, such as financial institutions or healthcare providers. It is also a good solution for remote workers or employees who frequently travel because hardware keys aren’t dependent on having a network connection. 


Cases of SIM Jacking and two-factor authentication-based phishing are relatively rare, but given the cost of a typical data breach today, which is now more than $4 million, many organizations would rather not take the risk.

Hardware authentication provides that extra layer of security for organizations because it is difficult to replicate and meets regulatory compliance requirements for certain industries. 

However, when deciding whether or not to roll out a hardware authentication program, it’s important to consider the procurement and maintenance costs and the level of security your organization would gain. Interested in stepping up your organization’s cybersecurity defenses? Contact us today to learn more about how we can help.